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E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 7: Consumer Behavior

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Chapter 7 Objectives

After reading Chapter 7 you will be able to: Discuss general statistics about the Internet

population. Describe the Internet exchange process and the

technological, social/cultural and legal context in which consumers participate in this process.

Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange.

Highlight the four main categories of outcomes that consumers seek from online exchanges.

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Hanover Direct’s 4 million customers buy through 12 different catalogs and Web sites.

99% of telephone customers complete an order; only 2% of all online visitors buy during a visit.

Consumer research revealed several reasons for shopping cart abandonment:

Technical difficulties. Consumer indecision at final check-out page.

By monitoring online behavior, Hanover has achieved 33% improvement.

Have you ever abandoned an online shopping cart? Why or why not?

The Hanover Story

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The Internet has grown faster than any other medium in history.

In 2004, 958 million people had access, representing 16% of the global population.

Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the Internet.

Consumers in the 21st Century

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Exchange refers to the act of obtaining a desired object by offering something in return.

Exchange occurs within a technological, social/cultural, and legal context.

The Internet Exchange Process

Technological, Social/Cultural and Legal Context

IndividualCharacteristicsResources

InternetExchange

OutcomesConnectEnjoyLearnTrade

Marketing Stimuli

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Technological Context

35% of online Americans connect to the Internet with a broadband connection.

Broadband has increased by 20% in the past 2 years.

The U.S. is only the 10th largest broadband market.

Broadband users exhibit different online behavior than those using mobile handheld devices or dial up.

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Top Broadband Country Markets

70.5%

50.3%

43.2%

36.2%

28.6%

28.0%

25.7%

24.7%

23.1%

22.5%

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

South Korea

Hong Kong

Taiwan

Canada

Singapore

Japan

Denmark

Belgium

Switzerland

United StatesC

ou

ntr

y

Broadband Penetration

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Social and Cultural Contexts

Social/cultural trends have a huge effect on online exchanges. Information overload overwhelms consumers. Time poverty creates multitasking and

contributes to a stressful environment. Home and work boundaries are dissolving. Consumers seek convenience and have high

expectations regarding customer service. Consumers cannot do without Internet access:

“online oxygen.”

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Social and Cultural Contexts, cont.

Self-service is required.Sophisticated consumers know they are in

control and have choices.Privacy and data security are paramount.Online crime worries consumers.

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Legal factors were discussed in Chapter 5. Despite piracy laws, illegally used software

abounds. In spite of the new Can-Spam law, the number

of unsolicited emails has increased. However, when the recording industry sued

thousands of illegal music file downloaders, consumer behavior changed. In 2002, 37% of online consumers shared music files. Only 23% shared files in 2004.

Legal Context

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Individual characteristics affect Internet use. Age, income, education, ethnicity, and gender Attitudes toward technology Online skill and experience Goal orientation Convenience or price orientation Family life cycle

Consumer resources for exchange Money, time, energy and psychic costs

Individual Characteristics & Resources

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The Internet exchange doesn’t use cash or paper checks for online transactions.

Many forms of digital money: Credit and debit cards. Electronic checks through a third-party such as

PayPal. Smart cards or Splash Plastic. Other innovative forms are appearing in other

countries.

Monetary Cost

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Online attention is a desirable and scarce commodity.

Worldwide, the average user goes online 29 times/month, 49 minutes each time.

Some researchers believe that consumers pay more focused attention online than with other media.

Hoffman and Novak applied the concept of flow to online behavior.

Time Cost

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Global Usage: 2002 to 2004

Metric Quantity

April 2002 June 2004

Number of sessions/visits for the month 18 29

Number of domains visited 48 57

Web Pages per Person per Month n.a. 1,001

Page views for each session 43 34

PC time spent per month n.a. 24 hours

Time spent online for the month 10 hours n.a.

Time spent per session 32 minutes 49 minutes

Duration of page viewed 44 seconds 46 seconds

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Energy and Psychic Costs

It takes effort to log on and check email, especially for dial-up users.

Consumers apply psychic resources to understand information or when facing technical problems.

Shopping cart abandonment and failed online purchases have numerous causes. Technical reasons. The consumer may be “window shopping,”

comparing several carts at once.

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Exchange Outcomes

There are 4 basic things that people do online: Connect Enjoy Learn Trade

Each is ripe with marketing opportunity.