Chapter 7 Objectives

1. 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 legalcontext 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.

2. The Customer’s Story • A typical one-hour adventure in the life of a 25-year-old professional male, Justin: • Tunes his iPod to the latest Diggnation podcast while his TV is tuned to a soccer game and his cell phone and PC are within reach. • Picks up his computer to find a blog mentioned during the podcast, sees a video on the blog, and texts a friend about the video.

3. The Customer’s Story, cont. • Justin searches for the video title on Google and finds a job posting on Vimeo, an online video-posting site. • He posts a link to the video and Vimeo site on his Twitter stream. • Justin is the new consumer: a multitasker interested in the social media. • How can a marketer capture dollars from these behaviors?

4. Consumers in the 21st Century • 71% of U.S. consumers use the internet; the other 29% can be characterized as: • Net evaders • Net dropouts • Truly unconnected • Intermittent users

5. Consumers in the 21st Century, cont. • In 2007, 1.4 billion people had access to the internet, 19% of the global population. • Ten countries account for 53% of all global users and adoption rates range from 69-88%. • Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the internet.

6. The Internet Exchange Process • Exchange is a basic marketing concept. • It refers to the act of obtaining a desired object by offering something in return. • Exchange occurs within the following contexts: • Technological • Social/cultural • Legal

7. Technological Context • 50% of online Americans connect to the internet at home with a broadband connection. • Broadband users enjoy more multimedia games, music, and entertainment than do those accessing from a mobile device or 56K (dial-up) modem. • The typical U.S. home has 26 different electronic devices for media and communication. • Consumers spend an average of 1.5 hours online daily.

8. Social and Cultural Contexts • One of the most important social trends is that consumers trust each other more than they trust advertising or companies online. • Social/cultural trends have a huge effect on online exchanges. • Sophisticated consumers. • Information overload overwhelms consumers. • Multitasking speeds up normal processes and lowers attention to each task.

9. Social and Cultural Contexts, cont. • Home and work boundaries are dissolving. • Consumers seek convenience and have high expectations regarding customer service. • Consumers cannot do without internet access: “online oxygen.” • Self-service is required. • Privacy and data security are paramount. • Online crime worries consumers.

10. Legal Context • Despite piracy laws, illegally used software abounds. • In spite of the 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.

11. Individual Characteristics & Resources • Individual characteristics affect internet use. • Age, income, education, ethnicity, and gender. • Attitudes toward technology. • Online skill and experience. • Goal orientation. • Convenience or price orientation.

12. Consumer Resources • Consumers perceive value as benefits minus costs. • These costs constitute a consumer’s resources for exchange: • Money • Time • Energy • Psychic costs

13. Monetary Cost • The internet exchange doesn’t use cash or paper checks for online transactions. • There are 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. • In South Korea some mobile phones have chips that allow vending machine purchases by phone.

14. Time Cost • Online attention is a desirable and scarce commodity. • Worldwide, the average user goes online 34 times/month, 69 minutes each time, visiting over 1,500 Web sites. • 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.

15. Energy and Psychic Costs • It takes effort to log on and check e-mail, especially for dial-up users. • Short text messaging (SMS) via cell phones and PDAs is becoming more popular. • Consumers apply psychic resources to understand information or when facing technical problems. • Shopping cart abandonment and failed online purchases have numerous causes. • Technical reasons • Marketing problems

16. Exchange Outcomes • There are 5 basic things that people do online: • Connect • Create • Enjoy • Learn • Trade • Each is ripe with marketing opportunity.