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The Decision Making Process and Purchasing Online

David MartinMaxine Ellison

Presentation Aims:

Consumers are increasingly using the internet as a method of purchasing goods and services. We will the typical objectives of marketers at each stage of the decision making process and show how they attempt to influence each stage in the context of internet shopping, making reference to both high and low involvement products and services.

The Decision Making Process

Problem recognitionInformation searchEvaluation of alternativesProduct choicePost purchase

Forces Influencing The Online Consumer’s Behaviour

Other stimuli: Personal and Environmental Uncontrollable Factors

Demographic, personal, cultural, sociological, economic, legal, environmental etc..

Marketing stimuli(Traditional Marketing Mix)

Buyer’s Decision ProcessProblem identification, Search, Trust building, Evaluation of alternatives, Choice, Post-purchase behaviour

Buyer’s Decision Product choice, Brand choice, Dealer choice, Purchase timing

Web Experience: Online Controllable Marketing Factors

Source: Based on P. Kotler’s framework (2003)

Stimulating Need Recognition

“ Problem recognition occurs whenever we see a significant difference between our current state of

affairs and our ideal state.”

• Product replacement• Opportunity recognition• Altered perception• Previously unsatisfied need• Trickle down – the purchase of one product offsets

another

Information Search

Types of information search: Existence / availability of the product or serviceInformation about the characteristics of the product or

serviceInformation regarding alternatives

INTERNAL vs. EXTERNAL

Information Search - Internal

All products / brands

Ones you know Ones you don’t

•Those you would consider buying

•Those you feel indifferent towards

•Those you wouldn’t consider

Memory

Information Search - External

Information Search - ExternalCentralisation of information -

• Consumers will typically search for more information when making a high involvement purchase.

• Consumers are likely to be brand loyal.

• Consumers are likely to make assumptions.

• The consumers prior expertise

• More market knowledge = less time spent on search.

• If there is too much or it is too complex the consumer is unlikely to make a decision.

Factors Which Effect Information Search

Evaluating Alternatives

High-involvement Compensatory decision rule

Low- involvementNon-compensatory rule

All Alternatives

Evoked set Inert set Inept set

Retrieval set Prominent products in environment

Journal 1Buying cars online: The adoption of the Web for high-involvement, high-cost purchasesDate: 12th November 2001

Authors: Mike Molesworth

Jukka-Petteri Suortti

(Bournemouth University, Fern barrow, Talbot Campus, Poole, Dorset, UK)

Methodology:

8 respondents were recruited from a convenience sample from the South England to participate in an in-depth interview.

Result: • There is an advantage online in the information search stage.

• In the evaluation stage, lack of product experience is a barrier.

• At the negotiation the lack of human interactivity is another barrier.

• After sales service was a perceived risk, and a key barrier that consumers faced and make them reject the online purchasing.

Traditional Perceived RisksFunctional

The product won’t perform well.Physical

There is a risk to personal health & safety.Social

Chosen product will cause social embarrassment.Financial

Product will not be worth the amount paid for it.Time

Time spent on product search is wasted if product doesn’t perform as expected.

Psychological• Poor product choice may affect status or ego.

Journal 2Understanding online purchase intentions: contributions from technology and trust perspectives. Date: 15th October 2002

Authors: Hans van der Heijden

Tibert Verhagen

Marcel Creemers

(Department of Information Systems, Marketing and Logistics, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, Amsterdam, The Netherlands)

Methodology:

228 undergraduate students studying information systems at a Dutch university were required to study two CD websites, one internet only and another that was part of a well known Dutch retail chain with stores. The students then filled in a survey.

Result:

• Trust, ease of use and usefulness are the threshold variables.

• There was no preference between the web only store and the one with physical shops.

Journal 3Consumer perspectives of risk and uncertainty and the implications for behaviour towards innovative retail services: The case of Internet BankingDate: February 2006

Authors: Dale Littler

Demetris Melanthiou

(Manchester Business School, The University of Manchester, Booth Street West, Manchester, UK)

Methodology:

5 In-depth interviews, 150 survey respondents. A mix of IB users and non-users.

Result:

• Respondents favoured well known brands which also had a physical presence (buildings, face to face staff) over web only banks.

• The main risks the respondents were concerned about were financial and security risks.

• Users felt that they were able to find relevant & sufficient information online.

Product Choice

o Heuristics o Determinant attributeso Market beliefso Product signalo Brand recognitiono Country of origin

Online Specific:

Post Purchase Evaluation

It is important for the consumer to feel satisfied with their purchase in terms of;

• Price• Function• Style• Acceptance from peers

If customers are happy with the purchase they are more likely to make repeat purchases in the future.

Conclusion

With online purchases the consumer is independent from the Company.

Highly involved decisions require more information and time.

Benefits of online are that it is a greater source of information, including independent recommendations and opinions.

A hindrance is its lack of inter-personal capabilities.

Thank you for your time.

Any questions?