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E-COMMERCE – LEARNING UNIT 3

E-COMMERCE – LEARNING UNIT 3. INTERNET CONSUMERS. INTRODUCTION. It is very important to understand the people that you will be selling your products to You need to find out what the needs and wants of your clients are before you can create and sell a product that fulfills those needs

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E-COMMERCE – LEARNING UNIT 3

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  1. E-COMMERCE – LEARNING UNIT 3 INTERNET CONSUMERS

  2. INTRODUCTION • It is very important to understand the people that you will be selling your products to • You need to find out what the needs and wants of your clients are before you can create and sell a product that fulfills those needs • For this reason, we study consumer behaviour • We have to understand the characteristics of consumers • We also have to understand the decision-making process • Therefore the outcomes of this unit are:

  3. OUTCOMES • DESCRIBE AND UNDERSTAND THE CHARACTERISTICS OF INTERNET SURFERS AND ELECTRONIC COMMERCE PURCHASERS • UNDERSTAND THE PROCESS OF CONSUMER PURCHASING DECISION-MAKING

  4. CHARACTERISTICS OF INTERNET SURFERS AND CUSTOMERS • Consumer online behaviour does not consist only of e-shopping • All the parts of the decision-making process can be done online • Think of the news: • While on a website, you might decide to read a news article = need arousal provided by the site • Should you need to learn more about the topic in the article, you may start searching on other sites = search and evaluation • By your reading and closing the website = information is consumed

  5. CHARACTERISTICS OF INTERNET SURFERS AND CUSTOMERS • OTHER ACTIVITIES BY CONSUMERS ONLINE ARE: • Information accumulation: • Using the internet to acquire information • Researching products, services, companies, special interests • Communication: • Using the internet to communicate with others, e.g. email, chat rooms, discussion forums • Surfing: • Activity of travelling around in cyberspace • Searching the internet without a purpose • Shopping: • Whole or part-purchase of goods and services through the internet

  6. CONSUMER CHARACTERISTICS • DEMOGRAPHICS • An important consideration when discussing demographics of consumers on the internet is the Difference between the national population of a: developed country, where income levels are closer together and developing countries, where there are large gaps between high and low income earners

  7. CONSUMER DEMOGRAPHICS • AGE • GENDER • EDUCATION • INCOME • FAMILY COMPOSITION • OCCUPATIONAL STATUS

  8. CONSUMER DEMOGRAPHICS • AGE: • Younger consumers: • use the internet for information and enterntainment • are more price sensitive • less access to a credit card • will explore more as their income levels are lower and they have more time • Prime internet shoppers are: • older • time-pressured • use the internet for business communication and transactions

  9. CONSUMER DEMOGRAPHICS • AGE • Older consumers (50 years and over): • Use internet mostly for communication (chat rooms, e-mail) • Can be prime candidates for all internet services if they have enough discretionary income and time

  10. CONSUMER DEMOGRAPHICS • GENDER: • Women are more likely to explore on the internet, while men are more likely to purchase online • Women spend less time, browse more and purchase less on the internet • Women like to communicate online rather than shop • Women are attracted to sites with women-oriented content, such as www.women24.com • Women are more concerned with privacy and security issues

  11. CONSUMER DEMOGRAPHICS • EDUCATION: • Internet users generally have a higher education level than non-users, especially in developing countries • In developing countries, adult literacy is low, so basic literacy takes precedence over computer literacy

  12. CONSUMER DEMOGRAPHICS • INCOME: • Internet users have been found to have higher than average incomes • Higher incomes often associated with higher education levels • In developing countries income levels determine access to the internet • Income levels are important in terms of access to credit facilities, so people who can’t get credit cards are very limited in terms of being able to do purchasing on line

  13. CONSUMER DEMOGRAPHICS • FAMILY COMPOSITION: • Presence of children in a family and the age of the youngest child have been found to influence the adoption of internet purchasing • Working women with children have less time to do shopping and are more likely to use internet shopping • Housewives and part-time female workers with pre-school children are also predisposed to using the internet for shopping • Retirees have more time, enjoy in-store shopping far more as it is seen as an “outing” and an opportunity to socialise.

  14. PERSONAL CHARACTERISTICS • CONSUMER INNOVATIVENESS: • Determinant of new product adoption • Individual is open to new experiences (general innovativeness) • Innovativeness can be focused on one type of product, such as technologically advanced goods (domain specific innovativeness) • Heavy usage is associated with involvement with a category, e.g. if you work in fashion, you would spend more time on fashion related sites and be more open to new ideas in fashion

  15. PERSONAL CHARACTERISTICS • TECHNOLOGY READINESS: • The extent to which an individual is open and receptive to new technologies • Great willingness and desire to be at the forefront of technological change • First to get the latest cellular phone with WAP and GPS • Technology schema: • An organised and arranged set of beliefs and expectations that one holds about technology. It reflects a person’s aversion or inclination towards technology.

  16. PERSONAL CHARACTERISTICS • GREGARIOUSNESS: • People who are unable to form proper social relations offline (low in gregariousness) are able to spend large amounts of time communicating with others through online chat rooms, discussion forums and listservs. • People with active social relations offline can nurture these relationships online by using e-mail, electronic greeting cards and chat sessions. • Thus people which are high in gregariousness are attracted to the internet as it promotes communication within their social groups • Both types of people can therefore take advantage of the communication function of the internet.

  17. PERSONAL CHARACTERISTICS • STUDENT ACTIVITY: • Find the definitions for: • Listservs • Chat-rooms • Discussion groups

  18. ENVIRONMENTAL/SOCIAL CHARACTERISTICS • 1. TYPES OF GOODS: • SEARCH QUALITIES • EXPERIENTIAL QUALITIES • CREDENCE QUALITIES • Internet does well with selling goods high in search qualities. Goods with experiential qualities are harder to sell, yet this has been overcome by: • Audio streaming • Downloading of one chapter of a book • Software trial periods • Brand names are popular on the internet as they have achieved credence qualities

  19. ENVIRONMENTAL/SOCIAL CHARACTERISTICS • 2. BRAND: • Offers assurance of quality, • can contact company if you experience problems • Represents a safe choice • Reliance on brands for experience and credence goods • Time-pressured consumers rely on brands for purchases over the internet • 3. OFFLINE PRESENCE: • If an e-tailer has off-line store, the consumer can rely on going there if there are problems, returns, servicing • Point of personal interaction for problems and complaints

  20. ENVIRONMENTAL/SOCIAL CHARACTERISTICS • 4. VARIETY: • Does the internet provide a variety or a wide choice of the product you want to buy?

  21. CONSUMER LIFESTYLES • Consumer lifestyles have been defined as: • The activities, interests and opinions of consumers, in sum, their “pattern of living”. • FOUR factors that influence consumer lifestyles are: • Attitudes towards technology • Time pressure • Occupational demands • Stage in the family lifecycle • STUDENT ACTIVITY: • Read through the paragraph on page 75 and find one exammple of how each of these factors above can influence consumers’ use of the internet

  22. CONSUMER DECISION-MAKING PROCESS

  23. DECISION-MAKING PROCESS STEP 1: Need identification/need arousal • Need identification occurs when the consumer recognises a need for a particular product/service. Consumers will surf the net and get exposure • Agents should track consumer needs and notify consumers when a desired product enters the market place (notification agents)

  24. DECISION-MAKING PROCESS STEP 2: Search and the consideration set • Online consumers tend to rely on one or two websites for their basic needs. They choose a few favourite sites that they add to their list of ‘favourites’ or ‘bookmarks’ and repeatedly visit these sites • The role of shopping agents and other decision aids focuses on search and recommendation agents (e.gananzi, google)

  25. DECISION-MAKING PROCESS STEP 3: Evaluation of alternatives • Evaluation of alternatives is based on the nature of information provided and the perceived reliability of that information. • Vast amount of information and options available on the Internet • Consumers normally make use of well-known short cuts • Decision aids/ shopping agents could consider the consumer’s criteria based on: price, delivery date, quality, brand, expert opinion, etc. and then suggest a product

  26. DECISION-MAKING PROCESS STEP 4: Product purchase • Once the decision has been made, the consumer can then purchase either online or offline. • Considerations would be: characteristics of the product/service, delivery options, consumer preferences, access to credit, trust, security concerns and country of residence

  27. DECISION-MAKING PROCESS STEP 5: Consumption • Individual differences such as consumer resources, motivation, lifestyle and personality generally influence the consumption process as well as the characteristics of the product/service. • Some products can be consumed online e.g music

  28. DECISION-MAKING PROCESS STEP 6: Post-consumption evaluation • Consumers can log compliments and complaints directly with the companies concerned • Orders can be tracked online • Follow-up e-mails • Keeping track of consumer behaviour • Communication strategy can be adapted based on consumer interest • Electronic database management • Consumer word of mouth e.ghellopeter

  29. LEVELS OF DECISION-MAKING • Consumer decision-making has been viewed in terms of three levels: • ROUTINE • LIMITED • EXTENSIVE

  30. LEVELS OF DECISION-MAKING • ROUTINE DECISION-MAKING: • Concerns mundane purchases (often necessities) • Purchased by the consumer with very little thought processes • For these goods, consumers do NOT move through the decision-making process an any extended manner. • Search and consideration set, alternative evaluation are limited or not used at all • E.g. bread, milk

  31. LEVELS OF DECISION-MAKING • LIMITED DECISION-MAKING: • Involves a greater number of thought processes • Consideration set, evaluation a little bit broader • Items can be high involvement, but not necessarily expensive • E.g. clothing purchases

  32. LEVELS OF DECISION-MAKING • EXTENSIVE PROBLEM-SOLVING: • Involves a great deal of search, a large consideration set and a far-reaching evaluation of alternatives • Expensive, big-ticket items • E.g. purchasing a car

  33. LEVELS OF DECISION-MAKING • ROLE OF THE INTERNET: • The internet has the potential to impact on all these decision-making types: • Routine purchases can be further routinised. Pick and Pay’s automated montly list, where your usual basked of goods is already selected, • Such a list can change limited decision-making into routine ones, e.g. in the store you will look at many varieties of a product, but if it is already on your online list, you will just take the one you always take • Shop bots (decision aids), especially when they recommend a certain product, can reduce the time consumers spend on decision-making • Extensive decision-making is enhanced by the internet. It produces vast amounts of information, access to experts and other users.

  34. ROLES PEOPLE PLAY IN DECISION-MAKING • Initiator: Suggests/thinks of buying a particular product • Influencer: Advice/views carry weight in making a decision • Decider: Makes a buying decision or part of it • Buyer: Makes the actual purchase • User: Consumes or uses a product or service

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