The Factors Which Influence The Consumers Buying Online Marketing Essay

Published Date: 23 Mar 2015

This chapter would showcase all the relevant theories used to support the consumer behaviour. The factors which influence the consumer's buying online and the way they can be segregated into groups will be discussed.

3.1. Introduction

On internet trade and commerce is increasing daily. There are various factors which influence the consumer to perform this trade. This dissertation will concentrate on these influencing factors which affect the consumer's behaviour while shopping online. The literature in this chapter would review the consumer characteristics and buying patterns of consumers online.

Microsoft's chairman Bill Gates believes [1] 'The internet is becoming the town square for the global village of tomorrow'. Cyberspace is a complex space with a rich set of useful features and functions. 'The internet' refers to the physical network that links computers across the globe. It consists of the infrastructure of network servers and communication links between them and are used to hold and transport information between the client PCs and web servers (Chaffey, 2007). In modern age internet is used to carry out various activities such as browsing, electronic mailing -for faster communication, instant chatting, social networking, file transfers etc. But originally it was used to connect various networks together for information sharing. It was used research scientists, students, and academicians. But now World Wide Web is increasingly used for information sharing by commercial organisations. It is a tool used for their e-marketing. Internet enables them to connect with global audiences through promotional campaigns and by offering the facility of online purchasing (Jobber & Fahy, 2003).

This digital revolution has empowered the masses by democratising information. It has laid foundation for 'network economy [2] ' an economy where everyone is connected to everyone else- people to people, firms to firms, firms to customer, and customers to firms in a more or less level playing field. This 'explosion in connectivity' [3] has been made possible by advent of the Internet (Sheth et al, 2001).

The evolution of Internet economy has opened gates for many small and large organisations to compete in the global marketplace. According to Vesterby and Chabert (2001), for businesses the internet is the best tool to send out the information about their products and services. By using internet companies can reach out to maximum consumers at low cost. The traditional ways of marketing by using brochures, publishing catalogues and fliers costs more than updating a website. The use of internet for business can also help the companies to recognise the trends of customer's purchases. This can help them in making changes according to the consumer's needs and wants.

The modern day consumer has many alternatives for a product. Due to fierce competition, the companies try to standout by their marketing activities i.e. by advertisement campaigns, offers etc in order to retain them. Hence the marketers must understand the consumer and how they take buying decision (Hollensen, 2004). The consumer receives a lot of information from different sources. The consumer then interprets the information according to his own needs and factors important to them. Therefore marketers have developed different theories on how consumer interprets these information, thereby understands certain consumer behaviours (Kotler and Armstrong, 2007). The ultimate objective of any given marketing strategy should be to attract, satisfy, and retain customers (Best, 2004, p. 15).

Many authors have identified various characteristics of online consumers. According to Modahl (2002) in early days of Internet, the demographics of online consumers were inclined towards young well educated male technophiles. Allred, Smith and Swinyard (2006) portrayed online consumer as young, wealthy, educated, having higher 'computer literacy' and are bigger retail spenders.

Whereas Donuthou and Garicia (1999) has different observation, they describe an online consumer as older, convenience seeker, innovative, variety seeker, less brand and price conscious and who is more positive towards advertising and direct marketing.

Since the technology is improving rapidly and also people's preferences changing with the emergence of better and improved products in market, it is difficult to identify the accurate characteristics of online consumer. Different types of products have different influence on consumers and their buying (Christopher & Huarng, 2003). Hence to get acquainted with the influencing factors on consumers, this study would further discuss about the characteristics of online buyers.

3.2. Consumer behaviour

Consumer behaviour is defined as 'The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society' (Hawkins, Best and Cooney,2001 p.7).

Consumer behaviour has got close relationship with marketing strategy explains Donal Rogan (2007). He states that 'strategy is about increasing the probability and frequency of buyer behaviour. Requirements for succeeding in doing this are to know the customer and understand the consumer's needs and wants.'

Human needs and wants of a consumer are inextricably linked. There is a very thin line between needs and wants, hence defining them can be difficult sometimes. A need of consumer can be his want or his want can be his need. It is a confusing puzzle for organisations to solve.

To distinguish between needs and wants it is important to know common characteristics of consumer. According to Kotler and Armstrong (2007) consumer's decisions are influenced by a number of individual characteristics that are linked to the consumer's specific needs.

3.2.1. Consumer characteristics

No person is an island. This statement is true in context of consumer behaviour. This part of research would study consumer characteristics as designed by marketers. It is grouped as: Cultural characteristics, Social Characteristics, Personal characteristics and Psychological characteristics. Understanding of these characteristics helps marketers to develop strategies for targeting their consumer.

Cultural characteristics

There are many factors which defines how an individual or a society live, buy, and consume. Cultural characteristics are recognised as the main influencer of consumer behaviour. These characteristics are determined by external influences such as culture, sub-culture and social class.

Culture refers to a set of values, ideas, artifacts, and the other meaningful symbols that help individuals communicate, interpret and evaluate as member of society (Blackwell et. al 2006 pp. 426). Culture influences an individual's needs and wants. Culture provides people with a sense of identity and an understanding of acceptable behaviour within society (Phillip R. Harris and Robert I, 1987). An individual gets exposed to different set of values and norms at very young age which influences his/her behaviour and decision making. Hence for marketer it is very critical to understand consumer's culture.

Subculture is an important element in determining culture and predicting consumer preferences and behaviours. It is small group formations with a certain number of people that share values and beliefs such as nationalities, religions, or geographic region. These small groups share common perceptions and cognitions that are different from the entire society; hence this forms a segment and can be targeted by the marketers. The buying behaviour among these groups is highly influenced by each other.

Social class is defined as relatively permanent and homogenous division in the society into which individuals or families sharing similar values, lifestyles, interests, wealth, status, education, economic positions, and behaviour can be characterised (Blackwell et. al 2006 pp. 468).

Social characteristics

The Social Characteristics are divided into three categories, namely Reference Groups, Family and Social role and status.

Reference group - A reference group is an actual or imaginary individual or group conceived of having significant relevance upon an individual's evaluations, aspirations or behaviour (G. Whan Park and V. Parker Lessig 'Journal of Consumer Research 4', September 1977). It is a group of which people always aspire to be part of but is not. It shapes individual's preferences according to group memberships. Reference groups influence consumers in three ways: informational, utilitarian, and value-expressive.

Information influence: The individual seeks information about various brands from their peer group, or from experts. This information influences their b buying behaviour.

Utilitarian influence: The purchase decision is influenced by people with whom the individual has social interaction e.g. family members.

Value-expressive influence: The brands which enhance the buyer's social status have a major influence on individual. He/she feels that the purchase of a particular brand will enhance the image others have of him or her. (G. Whan Park and V. Parker Lessig)

Family - A group of two or more people related by blood, marriage, or adoption who reside together is a Family (Blackwell et. al,2006. pp. 482). Family members have great influence on the buying behaviour. Each member of the family is counted while taking big decisions. Preferences, needs and wants of each member are considered. In families several different roles are played while making a decision these are: gatekeeper, influencers, buyers, and users. It is very important for marketers to target correct family member for their product's promotions (Michael R. Solomon,2006)

Role and status - According to Kotler and Armstrong (2007) roles are the activities that people are expected to perform in a group. This group can be an organisation or a family, each member has different responsibilities and decision making powers.

Personal characteristics

The concept of personality as stated by Solomon(2006) refers to a person's unique psychological makeup and how it consistently influences the way a person responds to the environment. The personal characteristics are categorised into: Age and lifecycle stage, Occupation, Economic situation, Lifestyle, and personality.

The age and lifestyle stage: An individual goes through various stages during his/her lifetime. During this journey their needs and wants changes along with their age, which accordingly influence their lifestyles. Hence, the marketers while designing the marketing plan define their target group according to the consumer's age and lifestyle stage (Kotler and Armstrong, 2007).

Occupation: A good occupation brings a good job title, which influences a consumer's purchase. This enables the manufacturers to offer more services and products in market.

The economic situation: An individual always shop or purchase according to his/her economic circumstances. With more disposable income comes more luxury. Wealth always affects consumer's choice and preferences.

Lifestyle: Lifestyle refers to a pattern of consumption reflecting a person's choice of how he or she spends time and money. In an economic sense, one's lifestyle represents the way one has elected to allocate income, both in terms of relative allocation to different products and services, and to specific alternatives within these categories (Benjamin D Zablocki and Rosabh Kantar, 1976). Consumer's lifestyle is key to many marketing strategies.

Personality: H. Kassarjian in his journal 'Personality and Consumer Behaviour (1971) explains personality as consistent responses to environmental stimuli. Various psychological factors define personality and environment of an individual which affect his or her personality. These are self-confidence, dominance, sociability, autonomy, defensiveness, adaptability and aggressiveness.

Psychological characteristics

The psychological characteristics are categorised in following concepts: Motivation, Perception, Learning, and Beliefs and attitudes.

Motivation: Motivation refers to the processes that lead people to behave as they do. It occurs when a need is aroused that the consumer wishes to satisfy. Once a need has been activated, a state of tension exists that drives the consumer to attempt to reduce or eliminate the need (Michael R. Solomon, 2006). There are different kind of needs such as biological needs which refers to basic satisfying needs like hunger, thirst and discomfort, and some are psychological needs for recognition, esteem and belonging.

Consumer motivation represents the drive to satisfy both physiological and psychological needs through product purchase and consumption (Berkman et al. 1997). Renowned psychologist Maslow proposed one of the most influential Model of needs, wherein he placed all the human needs in hierarchy. This model has helped marketer in gauging human needs and what motivates them to change their needs. These needs are listed as psychological needs, safety needs, social needs, esteem needs, and self actualisation needs (Abraham H Maslow, Motivation and Personality 2nd ed.).

Perception: Perception is the process by which physical sensations such as sights, sounds, and smells are selected, organised and interpreted (Michael R Solomon, 2006). Every consumer before buying a product perceives its importance and forms a perception about a product or service. Perception is a human tendency which enables a consumer to decide about things. There are three different processes that decide how we interpret certain information. These are Selective Attention, Selective distortion, and Selective Retention.

Learning: Kotler and Armstrong (2007) define learning as an act that changes people's behaviour because of their experience. It is commonly said that 'learning is an ongoing process' and it is an apt statement. Many psychologists believe that learning process occur through simple association between a stimulus and a response, or via a complex series of cognitive activities. Marketers try to influence consumer's learning process by designing attractive promotion campaigns.

Belief and Attitudes: