Mamamama

2000/2001 Full Time MBA Programme

How 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

Online Consumer Buying Behaviour

1. Contents

1. Contents 1

2. Executive Summary 1

3. Introduction 2

4. Academic Situation 2

5. Methodology 3

5.1 Model Selection 3

5.2 Industry and Company Selection 4

6. Attributes of the Internet 5

7. Proprietary Consumer Behaviour Models 5

8. 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


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 16

9. Conclusions 17

9.1 Emotional vs Rational elements of Behaviour 17

9.2 Who is the Online Consumer? 18

9.3 Final Conclusions 19

10. 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 21

11. Acknowledgements 22

12. Bibliography 23


2. Executive Summary

This paper sets out to investigate whether consumer buying behaviour has changed or is
changing because of the influence of online relationships between companies and
consumers. It tests the generic and widely accepted five stage consumer buying model
by looking at online consumer behaviour and attitudes, as observed by Marketing and
E-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 a
richer interaction between consumers and companies. In many ways it seems to answer
needs and provide a solution for deficiencies that already existed. But it would appear
that the Internet is better suited to certain stages in the process than others. It is most
prominent at the information search stage, providing a welcome alternative to long-
winded search processes, which are at times intimidating and intrusive. It has sped up
the physical process of searching, and could over time start to alter the consumer buying
process.

It appears that Internet users have assimilated it into their armoury of shopping media
and channels rather than using it exclusively. While it certainly answers many rational
needs, 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 any
differences between consumer behaviour online and offline is not as much a function of
the medium as of social class.

This analysis of consumer buying behaviour online confirms that the generic five stage
model still stands rather than offering an alternative paradigm of behaviour.

Three areas for further research are highlighted: What drives the consumer’s choice of
medium? The influence of the user’s location on navigation and buying behaviour, and
the roles played by different parties in the online buying process.

Page 1


3. Introduction

The impact of the Internet1 on consumer buying behaviour is a subject that marketers
and academics alike have been debating and grappling with for the past few years. Has
it irrevocably changed the way people go about buying on and offline? Is a totally
different paradigm therefore required? Models of consumer decision-making processes
attempt to explain and predict consumer behaviour, and so provide a basis for
Marketing decisions and strategy. If consumers are behaving in a different manner
because of the nature of their online relationships, the implications for branding and
marketing activity are huge.

4. Academic Situation

Little 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 of
industry: how the freeing of information from the physical value chain has affected
structures and processes. The trade-off between reach and richness of information no
longer holds2. Such authors assume (rather than define) a new paradigm for online
consumers making a purchase decision, based on perfect information and reached with
entirely rational processes. With more information and choice, conveniently and
immediately 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 a
delivery fleet served as formidable barriers to entry because they took years and heavy
investment to build, in this new world, they could suddenly become expensive
liabilities. New competitors on the Internet will be able to come from nowhere to steal
customers.”3

1
Use of the phrases ‘online’ and ‘the internet’ in this report refer to the World Wide Web accessed by
Personal Computer. M Commerce and Digital TV have not made enough of an impact to have any
observable affect on consumer behaviour, although many marketers believe that they again will change
the shape of online shopping when / if they become mainstream
2
Evans & Wurster: ‘Strategy and the New Economics of Information’ HBR, Sept/Oct 1997, pp. 71-82
3
Evans & Wurster: ‘Strategy and the New Economics of Information’ HBR, Sept/Oct 1997, pp. 71-82

Page 2


About online consumer behaviour, Hoffman and Novak (1996) propose a structural
model of consumer navigation behaviour in a ‘Hypermedia computer mediated
environment’, concluding that people indulge in either goal-directed activities, where
the interaction is with the company or product sought, or in experiential activities,
where interaction takes place between the consumer and the computer mediated
environment. They conclude that it is enduring involvement with a product generated
by experiential ‘flow’ that leads to opinion leadership rather than the situational
involvement of task-specific activity.

Butler and Peppard (1998) have analysed the traditional 5 stage consumer buying
model, identifying new opportunities for organisational strategies arising from
technological developments: databases, push technologies, communities and easy
payment systems. They emphasise that traditional models and assumptions from the
physical marketplace must be revisited and revised. However their research is not
empirical.

From the above, it would seem that the hypothesis for this report should be that the
Internet has changed the way in which consumers behave during the purchase process.

5. Methodology

In order to test this hypothesis, a model of consumer buying behaviour was selected.
Data was then gathered about both consumers’ behaviour online and their stated
attitudes, as observed by Marketing and E-commerce practitioners in detailed
interviews.

5.1 Model Selection

The generic and universally accepted ‘5 stage consumer buying process’ was selected to
test. This is familiar to all marketers, and provides a wide scope for research and
analysis. The inherent problem in selecting a model to test is that it will either be
labelled as too general or too specific, and this falls into the former category. It is
accepted that this is a highly simplified model, even for offline purchasing: it depicts a
straightforward, linear process, which in reality is probably circular, it is often iterative,

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with loops backward to previous stages, and the 5 stages can be broken down into many
more pieces. However, by using this model, it is also possible to comment on and
perhaps 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 Behaviour

5.2 Industry and Company Selection

The business to consumer travel and automotive industries were selected to test. There
were various reasons for this choice: both involve transactions with a relatively high
emotional involvement and high ticket price. Despite the high ticket price, they are both
purchases which many consumers would conceivably make on a relatively regular basis
in their lives. Both industries have well established marketing practices with a good on
and offline mix in communication, and, it was hoped, a good understanding of their
customers. They are both fragmented industries with complex pricing structures,
therefore ripe for re-engineering under the influence of the internet, travel being
particularly well suited because it is an intangible product: “travel is the killer
application for the internet”.4

Three companies were interviewed in each industry, two being well-established offline
brands, 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


BMW, Lexus and Autobytel.co.uk
&
BA, Thomas Cook and Cheapflights.com

Marketing and E Commerce practitioners were asked about their observations of
consumer behaviour online, and their resulting corporate strategies to capture the
customer. The question asked of them all was:

How does the Internet affect the traditional buyer behaviour model?

6. Attributes of the Internet

All 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)
•= Interactivity

7. Proprietary Consumer Behaviour Models

It emerged that some of the companies have defined their own version of the consumer
buying process in their industry.

Thomas Cook’s model of buyer behaviour has been developed over the past year from
observations of consumer behaviour in all media:

Page 5


Figure 2: Key Stages of the Holiday Booking Cycle, Thomas Cook

Wishing

Evaluating Wanting
Purchase
Cycle
Experiencing Exploring

Booking Filtering

The 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 behaviour

Autobytel have defined the key stages in the car buying process5. This appears to be a
truncated, action-oriented version of a purchase process, but, again, it fits in with the
generic model.

5
Fletcher Research, Copyright Autobytel UK Ltd: ‘The Second UK Online Car Buying Report’ 1999

Page 6


Figure 3: Key Stages of the Car Buying Process, Autobytel

Decide Make
Research Configure
how P urchase P urchase
P roducts Car
to buy Decision

Autobytel Model Generic Model
(1. Need Recognition)
1. Research Products 2. Information Search / 3. Evaluation of Alternatives
2. Configure Car 2. Evaluation of Alternatives / 3. Purchase Decision
3. Decide how to buy 4. Purchase Decision
4. Make Purchase Decision 4. Purchase Decision
5. Purchase 4. Purchase Decision
(5. Post Purchase Behaviour)

Since both industry-specific models fit broadly into the generic model, it therefore
seems valid to follow this model and investigate any change in consumer behaviour at
each stage that is due to the Internet.

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8. The Five Stage Consumer Buying Process

8.1 Need Recognition

Because of its direct nature, the Internet allows companies to prompt consumers in the
recognition of their needs. They do this by banner advertising and by contacting known
prospects directly. For example, BMW will alert customers by email to remind them of
the long lead-time for manufacture. These are equivalent tools to those used in the
offline world.

It doesn’t appear that consumer behaviour in the area of recognising a need has changed
due to the internet: they may or may not respond to such stimuli, as they do in the
offline world, and it is unclear how much their response is driven by the external
‘prompt’ or other, internal, motivators.

8.2 Information Search

The Internet seems to have answered an existing need in information searching and has
had the greatest impact on this stage. It immediately provides realms of information in
one place, unfettered by physical constraints. Consumers can access up to date detail as
well as information that in the offline world tends to be known only to the seller, such as
used car values in the automotive industry. There is no one offline alternative to online
searching: consumers have to combine visits to dealerships or travel agents for
brochures, buying and scanning newspapers and magazines, and finding out further
information 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 been
shortened or whether the search criteria have changed: perhaps not, since Lexus reports
no difference in the kind and level of questions asked online compared to offline at this
stage.

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8.2.1 Too Much Choice?

It had been assumed that unlimited choice is a good thing, but companies are
discovering the effects of perceived information overload by consumers. Butler and
Peppard quote Wilkie (1994) in describing the experience of facing too much
information as being ‘psychologically costly’ for consumers. It is this uncertainty
which can still lead to brand loyalty by default as much online as it can offline. Thomas
Cook relied on this when branding their site Thomascook.com rather than creating a
new brand like Thompson’s ‘The First Resort’.

8.2.2 Usability

Consumers’ “sod it factor”6 is reportedly getting shorter as the internet matures and the
companies interviewed have come to realise that the design and usability of their site is
key to retaining consumers through the purchase process, and encouraging them to
return. 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 first
computer. 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 be
intuitive.

8.2.3 Avoiding face to face contact

Looking at consumers’ dislikes about the traditional car buying process in Figure 4, it
seems that the internet is a welcome tool to many (men as well as women) in providing
seemingly impartial information in the non-pressured environment of their home or
office.

The main concerns are about pressure selling and being ‘ripped off’. The impersonal
nature 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 the
search. The travel industry also faces some of this attitude: Thomas Cook evidence

6
Darren Payne, Autobytel.co.uk

Page 9


suggests 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 to
61% phone and 65% shop users). This highlights the importance of a separate period of
information collection and thought gathering before a transaction is considered and
pressure 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

61
Impersonal salesman approach
59

63
Worried about ripped off
71

70
Pressure selling
73

0 10 20 30 40 50 60 70 80
% all respondents

Source: Fletcher Research, March 2000. Copyright Autobytel 2000

This change in behaviour means a shift in the role of the physical ‘marketplace’ in the
buying 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 and
transaction, arguably where they have always added the most value anyway.

Those consumers who have carried out their information search online are reportedly
much better prepared and tend to spend less time when they do interact face to face in
the dealership or travel agent. This would be because they are not attempting to
combine the search process with the purchase process.

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8.2.4 Multi Media Usage

Despite being apparently the answer to many consumers’ prayers about information
search, the Internet is still used as one option in a range of media, even at this stage, and
certainly within the entire buying process. This is reflected in companies’ multi-media
CRM strategies.

8.2.5 Telephone usage

Most companies interviewed were surprised by the amount that consumers are using the
telephone 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 available
online, many consumers need the reassurance of talking to someone – whether to
confirm what they have read, especially about availability, or to ask very specific
questions. This trend of phone usage for reassurance is even more apparent further
down the buying process, especially at the purchase stage.

Autobytel confirms that phone use mirrors Internet use, which is mostly during the
week. They are even closing their call centre at weekends. This suggests that ‘desk
research’ is done at the office, while leisure time is used for offline researching: in the
case of car-buying, visiting dealerships and test driving.

The Internet is not necessarily an alternative to pure phone use, however, as the needs of
pure phone and Internet users seem to be different. Thomas Cooks’ proprietary research
shows that telephone users think price is the most important reason for their choice of
channel, whereas Internet users state convenience. This suggests that different
sociodemographic groups use the two media.

8.2.6 Brochures are still important

Although the Internet provides plentiful, immediate and up to date information,
magazines and brochures are still in demand. As mentioned above, brochures are now
frequently ordered online, but order numbers have certainly not dropped. They seem to
fulfil a different, more emotional and aspirational, aspect of the search process: not only

Page 11


because of the quality of images which the Internet cannot yet compete with, but also
because of their transportability. Brochures can be more socially inclusive than the
Internet – they can be shared around, people can show their friends. At the other
extreme, they pass the “3Bs Test”: they can be referred to or just enjoyed in the most
private 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 early
pro-internet rhetoric implied (Evans & Wurster) since they indulge in different levels
within the information search stage – rational, emotional, absorbing the big picture and
hunting for detail, at different times of the day and in different locations.

8.3 Evaluation of Alternatives

Comparison continues to be an important part of a consumer’s search process online.
The Internet is well suited to presenting comparative information, allowing
personalisable criteria and drawing on a vast range of information. This is why there is
a proliferation of comparator sites, like Cheapflights.com in the travel sector, extending
the 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 their
own comparison information direct to the consumer, like BMW who enables users to
compare BMW models with their competition online. BA does not provide
comparisons with other airlines, but does show alternative BA prices for a route at
different times in their Fare Explorer function. This does not represent any change in
consumer behaviour because of the Internet, instead it shows that companies who
communicate via the Internet are adapting to traditional consumer needs.

8.3.1 Price & Gender

Although price is not the main reason that people use the Internet, according to Thomas
Cook’s research, it is still important, and to some more than others. Jupiter MMXI
research on buying behaviour in travel in July shows that Cheapflights.com and other
sites selling flights only are most favoured by women. This is backed up by
Cheapflights’ own survey showing a high proportion of female users. This suggests that

7
A term created by Nick Hart, Brand & Communications Manager, BMW (GB)

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women are generally more price-sensitive and keener to shop around. Some offline
research carried out in 19928 into offline shopping habits showed that although men
claimed to be more promiscuous shoppers, studies of behaviour showed that women
were in fact less loyal: men saw shopping as more of a chore than a pleasure. In
Cheapflights’ userbase we see traditional, offline tendencies being highlighted in the
more highly segmented online world.

8.3.2 ‘Kicking the tyres’ in car buying

Whether the purchase is a long-awaited and dreamed-of new car or a second hand car
bought to get from A to B, the majority of buyers still need to see and test the car or
model ‘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, or
replicate the sound of the engine. The Internet can only enable this process by booking
a test drive online.

8.4 Decision

The decision stage can be broken down into several elements, as Autobytel’s model of
consumer behaviour shows. The consumer must decide on the product and its
configuration, decide on the purchase channel, and then go through the process and
mechanics of purchasing. All of these are reached by a combination of rational and
emotional factors, influenced by the price ticket, the frequency of purchase, the
complexity of the product and pricing, familiarity with the channel, and trust in the
brand. The personal influence of a dealer or agent face to face can also have great
effect, 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 by
AIR MILES Travel Promotions Ltd, Nov 1992

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8.4.1 Closing

It appears that online consumer behaviour is not so different to offline behaviour at this
stage. Autobytel have learned this lesson over the past few years. Intending to offer an
alternative to dealership ‘pressure selling’, their early model provided the customer with
information 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 a
consumer had decided upon was not immediately available, they merely stated this fact
and the expected lead-time. This meant that the consumer either waited, or their
purchase 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 they
were 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 contact
with customer, sitting them down with a cup of coffee and talking them through the
options. As the consumer goes through the purchase process, they tend to return to
whoever treated them the best. Autobytel are seeking to build this obligation online, by
offering a ‘virtual cup of coffee’. They now offer alternatives when a particular model
or colour is not available, and are able to leverage off the greater choice over range of
manufacturers and geographical area that the Internet provides.

8.4.2 Freedom of Choice

Online, consumers respond well to choice at the configuration stage. The car
configurator on the BMW Direct site has shown that it is very easy to significantly
upgrade a car online. It sounds counter-intuitive that the Internet, where the
consumers’ actions are self-directed, should have greater success at upselling than a
dealer, who guides the consumer through the process. But it seems that the dealer is
often too keen to get a signature on paper and close the deal to run through all the added
extras. By contrast, on the BMW Direct site, users can see every option and select as
many as they want, in their own time. The average cost per car sold direct is above the
that of BMW’s average company car price.

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8.4.3 Multiple Media

Many consumers still use another communication medium either for or as part of the
purchase process. The main exception is the purchase of flights: Thomas Cook report
that 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 go
straight to telephone details and Thomas Cook reports that a great number of customers
carry out their initial exploring online, then use the phone or shop to find out availability
and book. Some even come in with computer print out and ask the agent to book that
exact holiday.

There seems to be a strong requirement at the purchase stage for human reassurance that
the Internet is unable to provide. Much of this can be attributed to concerns about the
security of payment, especially with travel prices starting at £100, and cars much higher,
with a more complicated structure involving financing options. A lack of familiarity
with the medium may also be responsible (many consumers telephone Thomas Cook
after booking online to make sure it has all worked). The desire for human, real time
interaction increases as the complexity of the purchase increases: no consumer has yet
paid 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 reflection

Consumers are not executing online in real time. There still seems to be a period of
reflection between the decision being made, and before the transaction actually takes
place. This is shown in the fact that both Cheapflights and Autobytel report their peak
time for booking being Monday morning. Consumers have come to a decision about a
car or holiday over the weekend, and go through the mechanics when they get into
work. Consumers are not visibly speeding up their decision-making processes for
purchases of high emotional involvement under the influence of the potential
immediacy of the Internet.

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8.5 Post purchase behaviour

The interviews did not highlight any major differences between post-purchase
behaviour online and offline, although it is clear that the Internet presents further
opportunities to both consumers and companies.

8.5.1 Post Purchase Reconfirmation

In the same way that 22% BMW brochures are requested after the car has been ordered
or delivered, so consumers are using the Internet to confirm their choice, find out more
about the model, or to soak up the promises of the brand.

8.5.2 Ongoing Relationship

Ongoing, the internet is used as an additional touch point: consumers express their
views and suggestions by writing and telephone, as well as email, but Lexus has noticed
no difference in the content of messages sent through different media. BA can see that
the Internet is extending the reach of a consumer’s relationship with them, as they have
noted that some customers use their online check in facility without having booked
online with BA. It would seem to be the case, as Darren Payne at Autobytel
commented, 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 offered
relevant services.

8.5.3 Recommendations

The hype about viral marketing doesn’t seem to have translated into reality: Thomas
Cook have run successful campaigns, but realise that it takes a lot of trust for consumers
to buy online from them. There is a 5-10% click through rate from email newsletters
they send out. As Mike Nalder, Thomas Cook’s Manager of Customer Information and
Analysis, commented “getting their email address is like buying them a drink in a bar:
your next question can’t be ‘will you marry me?’”

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Cheapflights relies very heavily on offline word of mouth recommendations for its
traffic. They benefit greatly from Travel Editors recommendations in the press.
Looping back up to the need recognition and information search stages, this suggests
that consumers remain more influenced by offline media than new online tools.

9. Conclusions

A couple of themes have emerged throughout the analysis that I would like to highlight
below.

9.1 Emotional vs Rational elements of Behaviour

The 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 the
context and objective of the purchase: is it a second car to do the school run, or is it a
dream car that you have waited for all your life? Is this just a flight that you know the
price 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 purchase
decision. It is an impersonal medium, the visual quality of which is not yet advanced
enough for high quality images. Considering that one of the main uses of the web by the
automotive 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, it
makes 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 be
looked at in two ways: rational decisions being taken about a new car with all the
information provided, or the creation before your eyes of a personalised dream, with
navigation becoming experiential. There must be an element of the latter, since we have
seen the extent of emotion in the purchase process.

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It would seem that it is not as straightforward as a medium serving either emotional or
rational 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 the
process of interaction.

Although statistics vary enormously, one clear fact is that the majority of people who
access the Internet are in the higher sociodemographic groups. Thomas Cook realised
this, and quickly changed the balance of their online product offering: having put
package holidays online, they have started to source more flights for short breaks. If
this 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 general
population.

Offline, ABC1s are typically ‘time poor, cash rich’, they tend to be self-reliant and
require convenience above other factors. Figure 5 shows the results of Thomas Cook’s
research 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 that
these people have always had, and is perhaps better suited to their shopping habits than
are 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 its
main users, ABC1s, behave offline. If and when other sociodemographic groups go
online in any volume (through whatever access methods), those differences that there
are in the online buying process compared to the offline world may well decrease yet
further.

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Figure 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 90

Source – Thomas Cook proprietary research

9.3 Final Conclusions

This analysis of consumer buying behaviour online confirms the generic five stage
model rather than offering an alternative paradigm of behaviour.

It appears that Internet users have assimilated it into their armoury of shopping media
and channels rather than using it exclusively. While it certainly answers many rational
needs, 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 a
richer interaction between consumers and companies. But it would appear that the
Internet is better suited to certain stages in the process than others. It is most prominent
at the information search stage, where it has sped up the physical process of searching,
and could over time start to change consumer’s behaviour.

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The Internet seems to answer needs and provide a solution for deficiencies that already
existed. Especially in the information search stage, it provides a welcome alternative to
long-winded search processes, which are at times intimidating and intrusive. Consumer
behaviour online is not as much a function of the medium as of social class.

10. Areas for further research

10.1 What drives the Consumer’s choice of medium?

This report suggests several explanations as to what makes a consumer use a certain
medium at a certain time: convenient access to information, the belief that they will get
a good price, reassurance, security, the stage they are at in the buying process. Or it
could just be whatever is physically convenient for them at that moment in time. It
would be interesting to investigate this area further.

10.2 Influence of user location on navigation and buying behaviour

The two main points of Internet access in the UK are home and office, and many people
have access at both. Despite the fact that there are about twice as many people with
access at home as those with access at work, the indications for peak usage times in this
project suggested that office use was dominant.

The graph below shows a difference in the emphasis on surfing and searching behaviour
in the office and at home. It can be deduced that online activity is more goal-directed in
the office, and more experiential at home. It would be interesting to look in more detail
at the influence of the user’s location on their engagement in a buying process, and how
they use the Internet in that process.

Page 20


Figure 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 90

Source: UK Internet User Monitor, Nov 1999; Fletcher Research

10.3 Buying roles

Offline, it is acknowledged that different roles are played by different parties in the
purchase of an emotionally-involving item, and this is especially true of a car or a
holiday that will be used or experienced by more than one person. The effect of the
Internet on these roles did not really come across in this project, partly because
companies do not yet have the level of data on their consumers that would enable them
to identify the protagonists.

Page 21


11. Acknowledgements

The 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


12. Bibliography

Fletcher Research, Copyright Autobytel UK Ltd: ‘The Third UK Online Car Buying
Report’ 2000
Fletcher Research, Copyright Autobytel UK Ltd: ‘The Second UK Online Car Buying
Report’ 1999
Thomas Cook proprietary research
Hoffman D. L. & Novak T. P.: ‘Marketing in Hypermedia Computer-Mediated
Environments (CMEs): conceptual foundations’ Journal of Marketing, vol 60 July 1996
Philip B Evans & Thomas S Wurster: ‘Strategy and the New Economics of Information’
HBR, Sept/Oct 1997
Reichheldt & Schefter: ‘E Loyalty: Your Secret Weapon on the Web’ HBR, July/Aug
2000
Butler 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 and
published by AIR MILES Travel Promotions Ltd, Nov 1992
Jupiter MMXI Press Release: ‘Over 4.5 million Britons log on for their holidays this
summer’ 6 August 2001 (www.jmm.com)
Mark Hodson: ‘Online Travel Finally Clicks’ Sunday Times Travel, 13 May 2001

Page 23

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