Characteristics Affecting Consumer Behaviour

Characteristics Affecting Consumer Behaviour Consumers buying behaviour has been comprehensively researched by marketers in order to understand how, what and why customers buy products and on what are the basis of their decisions. The fundamental basic approach into analysing consumer buyer behaviour is considered the Stimulus Response model developed by Pavlov shown in Figure . In this model consumers are subject to marketing stimuli as well as other stimuli such as economic, technological, political and cultural events. These are then evaluated by the customers black box which is based on personal buyer characteristics and decision processes, and hence different buyer responses are observed (Kotler Armstrong, 2001). Figure : Model of Buyer Behaviour Kotler Armstrong (2001) define the traditional buying decision process in five consequent steps which consist of: Problem identification Information search Evaluation of Alternatives Purchasing decision Post purchase behaviour The above model implies that the buying process initiates quite before the actual purchase and continues after. The process starts with the need recognition where the consumer recognizes a problem or a need, which could be caused by internal or external stimuli. The consumer will hence start to search and gather information in order to satisfy their needs. Information can be obtained from a variety of sources such as personal sources, commercial sources, public sources, and experiential sources. Once the consumer is armed with the required information, the consumer uses this information to evaluate alternatives in selected the brand. Following the evaluation of the options available, the consumer is required to make the purchase decision and select which brand to purchase. The loop doesnt close with the purchase of the product, but rather post purchase behaviour recognises whether the product meets the consumers expectations. Customer satisfaction is key because it will result in rep eat customers and positive word of mouth. Characteristics affecting consumer behaviour Consumer behaviour is highly influenced by external and internal factors. The external factors are divided into five sectors: Demographics, socio-economics, technology and public policy; culture; subculture; reference groups; and marketing. The internal factors include a variety of psychological factors, such as beliefs and attitudes, motivation, perception, learning and self-image (Malcolm, 2001). Studies have shown that these factors and others that fall beyond the marketers control have a significant impact on consumers behaviour and purchasing decisions (Dibb, et al., 2001; Solomon Stuart, 2003). Shah (2010) refers to traditional consumer behaviour in purchasing goods and services as the process of selecting, purchasing and consuming of goods and services that satisfies consumer wants. Consumers select the product they would like to consume by identifying the good or product that provides them with the greatest value in return. Hence the consumer will focus on the available spending power to obtain the commodity. Following the analysis of cost and price of the commodity, a final decision is taken to select the best option that satisfies the consumer needs. This process does not occur in vacuum, and is highly influenced by various factors such as social, cultural, personal and psychological factors. Although marketers have little or no influence on the mentioned factors, they still have some very important tools which may affect the buying decision process. The marketing mix, also known as the 4Ps product, price, place and promotion, is the set of controllable marketing tools that the firm uses to influence consumers behaviour in order to obtain a desired response from the target market (McCarthy, 1960). Online Buying Behaviour Since the expansion of the World Wide Web in the mid-1990s, the Internet has grown to become one of the most powerful distribution channels with a rapid increase in ecommerce transactions. This raised the need for marketers to discover the customers online behaviour and understand their decision making process when making purchases online. There are substantial differences between offline and online consumer behaviour. In his study, Vijayasarathy (2001) tried to clarify consumer online shopping behaviour by integrating web specific factors into the Theory of Reasoned Action (TRA). Furthermore Song and Zahedi (2001) examined the effects of website design on the adoption of internet shopping by developing on the model of the Theory of Planned Behaviour (TPB). Oppenheim and Ward (2006) argue that consumers are motivated to buy online because of the convenience provided. The internet provides unlimited opportunities for potential customers to purchase products at any given time and place. The internet also provides limitless information about products and services which is easily accessible to online visitors. Furthermore when comparing online shopping to traditional shopping, there are no waiting lines for shoppers on the internet and no pressure coming from sales people (Smith Rupp, 2003). However studies show that the internet has become a useful tool for comparative shopping, where users browse the web to search and compare products, whilst making it easy to abandon the purchasing process (Degeratu, et al., 2000). Furthermore Anfusos research (2004) shows that the online search for information about products drive offline sales. Consumers prefer to search for product information online since it is much more convenient, and hence purcha se the product from a brick and mortar store. Different authors have identified various divergent personas describing what the online buyers look like. Marker (2011) suggests that online buyers tend to exhibit the following psychological characteristics: egocentric, impatient, impulsive, educated, informed, thrifty, private, cautious, indecisive and pleasure-driven. In their study Donthu and Garcia (1999) propose that online shoppers tend to be convenience seekers and tare easily influenced by marketing campaigns. Furthermore they also put forward that internet users are less price and brand conscious, whilst also suggesting that these have a higher purchasing power. Other studies show that online customers are more likely to be of a young age with a high disposable income. It is also propose that they have a solid level of education especially in computer literacy, as well as being big retail spenders (Allred, et al., 2006). As mentioned earlier there are various factors which impact the traditional consumer behaviour. Liang and Lai (2000) suggest that online consumer behaviour has similarities with the traditional consumer behaviour, where consumers recognize a need for a product or service, use the internet to search for information, evaluate alternatives to choose the best solution and finally purchase the product followed by post purchase evaluation. However other studies indicate that there exist various factors that differ from the traditional consumer markets to the online environment. Refernce groups effecting consumer behaviour online have taken the form of virtual communities, consisting of blogs, forums and other forms of discussion groups (Huarng Christopher, 2003). Social influences, such as experiences, recommendations and tastes of online bloggers have an effect on online consumer buying behaviour and have a significant impact on the final decision the consumer makes. In their study Hasslinger, et al., (2007) highlight the fact that cultural differences also highly influece online consumer behaviour, especially the difference in social class the consumer belongs to. Consumers who form part of a higher social class have a higher probability of owning a computer with internet access, and thus they are more likely to purchase online than consumers from lower social classes. Personal influences effecting online behaviour also relates to the income the consumers earn, since there exists a positive correlation between households with higher income and computer possession, internet access and advanced level of education (Monsuwe, et al., 2004). Age was also recognised as being another determinant for effecting online shopping behaviour (Smith Rupp, 2003). Younger people are more pertinent in using the internet as a shopping medium compared to the older generation, since the latter tend to have less technical know-how and are far less inclined to commit and trust online vendors. Furthermore Smith and Rupp (2003) classify motivation, perception, personality, attitude and emotions as the set of psychological characteristics influencing online consumer behaviour. With the launch of Web 2.0 in 2004, the interaction between online consumers and vendors has become a reality, which became possible due to evolution of high-speed broadband connections. Web 2.0 consists of a collection of interactive tools and social communication techniques which are aimed to increase user participation and engagement online through its virtual word of mouth (Chaffey, 2011). In their study, Wirtz, et al., (2010), identify social networking and interaction factors as the two most important factors affecting online consumer behaviour from the Web 2.0 era. Moreover social networking provides online consumers with enhanced trust factors and helps retain online customers, which is fundamental for online retailers (Jarvenpaa, et al., 2000). In their research, Cheung, et al., (2003), analysed 351 publications and classified the theories used to understand online consumer behaviour. They conclude that the principal models in assessing this area are the Theory of Reasoned Action (TRA) together with the Technology Acceptance Model (TAM) and the Theory of Planned Behaviour (TPB). Other theories which have been tested include The Expectation Confirmation Theory (ECT) and Innovation Diffusion Theory (IDT). Table provides the list of the most frequently tested theories in the area online consumer behaviour together with their references. Cheung, et al., (2003) take a holistic view of the online consumer purchase process, where they investigate the connection between the intention, adoption and continuance of purchase from online consumers. Their Model of Intention, Adoption and Continuance (MIAC) recognised that businesses primarily focused their efforts in attracting online customers. However due to stiff competition, organisations changed their attention from initial purchase to retaining customers and building customer loyalty. Table : References of Online Consumer Behaviour Research Online marketers persuasion tools Consumers are subject to influences from marketers which might impact their purchasing behaviour. Marketers provide stimuli to the consumers black box in order to try and influence the consumers decision prior to making their purchase decision (Kotler Armstrong, 2001). The set of controllable (i.e., traditional marketing) and uncontrollable (i.e., environmental factors and personal characteristics of the consumer) factors between online and traditional markets do not vary fundamentally, where both markets have factors which are within the influence of marketers and some factors which fall beyond their reach. As discussed above, most uncontrollable factors are quite similar for both the traditional and online markets (Dibb, et al., 2001; Solomon Stuart, 2003). However a thorough analysis of the online consumer purchasing decision indicates that the controllable factors influencing the traditional markets are distinct from those influencing the online market. Although most of the traditional marketing activities, such as mass advertising and sales promotions, can be applied to the online market in order to try and influence the online consumer behaviour, they are likely to be futile due to the changing nature of the online consumer (Urban Hauser, 2003). Moreover, Constantinides and Geurts (2005) suggest that traditional marketing tools are ineffective when targeting potential global online customers dispersed across different geographical regions. Since most of the interactions between online customers and online vendors occur on the web, a logical assumption is that the main marketing influences produced from the online vendors are experienced by customers online. Online marketers can influence the online consumer behaviour primarily by delivering the proper online experience, more known as the Web Experience. The virtual marketing elements constructing the online consumers Web Experience are under the e-marketers control and can shape or influence the consumers behaviour during an online interaction (Constantinides, 2004; Constantinides Geurts, 2005). Forces influencing customers purchase intention (Model) The Web experience is a combination of online functionality, information, cues, stimuli and products/services (Constantinides, 2004). The company website is primary medium of delivering the Web experience, which is the gateway between the organisation and the online customers. Constantinides (2004) explores the idea of introducing the Web experience as one of the controllable marketing factors influencing the online consumers behaviour. Figure illustrates the controllable and uncontrollable elements influencing the online consumer behaviour. Figure : Forces influencing the online consumers behaviour Source: Based on Constantinides framework (2004) Web Experience Web Experience Elements Content Category Aesthetics Marketing Mix Psychological Category Trust and Commitment Functionality Category Usability Interactivity