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© Prentice Hall, 2000
Chapter 3
Internet Consumers and
Market Research

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© Prentice Hall, 2000
Learning Objectives

Describe the essentials of consumer behavior

Describe the characteristics of Internet surfers and EC
purchasers

Understand the process of consumer purchasing decision making

Describe the way companies are building relationships with
customers

Explain the implementation of customer service

Describe the consumer market research in EC

Experience the role of intelligent agents in consumer applications

Describe the organizational buyer behavior model

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© Prentice Hall, 2000


The Importance of Customers

Competition

“fighting” on customers

to succeed : control the 3Cs

Customers

customers becomes a King/Queen

to succeed : finding and retaining customers

Change

EC is a new distribution channel

to succeed : convince customers to go online and
then to choose your company over the online
competitors

The major pressures are labeled the 3Cs

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© Prentice Hall, 2000
A Model of EC Consumer Behavior

Purchasing
decision

begins with
customer’s
reaction to
stimuli
Vendors’ controlled System
Logistic
Support
Payments,
Delivery
Technical
Support
Web design,
Intelligent-
agents
Customer
service
FAQ,
e-mail,
Call centers,
One-to-one
Decision
Making
Process
Stimuli
Marketing
Price
Promotion
Product
Quality
Others

Economical
Technology
Political
Cultural
Buyers’ Decisions
Buy or not
What to buy
Where (vendor)
When
How much to spend
Repeat purchases
Individual
Characteristics
Age, gender, ethnicity,
education, lift style,
psychological, knowledge,
values, personality
Environment
Characteristics
Social, family,
communities

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© Prentice Hall, 2000

Consumer Types

Individual consumers: get much of the media attention

Organizational buyers: do most of the shopping in cyberspace


Purchasing Types

Impulsive buyers: purchase products quickly

Patient buyers: purchase products after making some comparisons

Analytical buyers: do substantial research before making the decision to
purchase products or services

Purchasing Experiences

Utilitarian: shopping “to achieve a goal” or “complete a task”

Hedonic: shopping because “it is fun and I love it”
A Model of EC Consumer Behavior (cont.)
Variables Influencing
Decision Making Process

Environmental Variables

Social variables

people influenced by family members, friends, co-
workers, “what’s in fashion this year”, Internet
communities and discussion groups

Cultural variables

Psychology variables


Other environmental variables

available information, government regulations,
legal constraints, and situational factors
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© Prentice Hall, 2000
Consumer Demographics

Gender (61% male user & 39% female user)
WOMEN’S PURCHASES BY CATEGORY (1998)
Purchases Category
% of Total Category
Purchases (299)
% of Total Respondents
Buying (166)
Computer Software 15% 39%
Books 14% 35%
Music 11% 28%
Magazines 11% 28%
Flowers 11% 28%
Women’s Clothing 7% 19%
Computer Hardware 5% 12%
Games 5% 11%
Videos 4% 10%
Crafts & Craft Supplier 4% 10%
Toys 3% 9%
Home Furnishings 2% 6%

Children’s Clothing 2% 4%
Men’s Clothing 2% 4%
Art 2% 4%
Jewelry 1% 3%
Furniture 1% 2%
TOTAL 100%

Consumer Demographics (1998)
Variables Influencing Decision
Making Process (c ont.)

Age (mostly 21-30 year-old)

Marital status (41% married & 39% single)

Educational level (81% with at least some college
education & 50% obtained at least baccalaureate
degree)

Ethnicity (87% white in America)

Occupation (26% educational-related field, 22%
computers & 22% other professionals)
© Prentice Hall, 2000 8
Variables Influencing Decision
Making Process (c ont.)

Consumer Demographics

Household income (46% at least $50,000/year)


Internet usage profile (Internet access option, length
and frequency of web use & access cost)

Internet access option (63% primarily form home & 58%
primarily from work or school)

Length and frequency of use (88% access daily & 33%
access 10-20 hours a week)

Access cost (67% pay for their own Internet access &
31% paid for by their employers)
© Prentice Hall, 2000 9

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© Prentice Hall, 2000
Consumer Buying Patterns
In last six months of 1998:

76% filling out a form on the Web

Online purchases are more than
paper catalog purchases for Net
buyers

32% spent between $100.00-
$500.00

Spending of less than $50.00
decreases steadily as shoppers

gain experience

Women are more likely to
purchase more in the under $50.00
level, and less likely to purchase at
the above $500.00 level
0
10
20
30
40
50
P e rc e n t
less
than
$50
$50-
$100
$100-
$500
$500
or
more
Don't
know
Amount Spent on Web
in Last 6 Months of 1998
< 1 Year
1 - 3 Years
> 4 Years

Experience:

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© Prentice Hall, 2000
Consumer Purchasing Decision-Making

Roles that people play in the decision making
process

Initiator : the person who first suggests or thinks of
the idea of buying a particular product or service

Influencer : a person whose advice or views carry
some weight in making a final buying decision

Decider : the person who ultimately makes a buying
decision or any part of it - whether to buy, what to buy,
how to buy, or where to buy

Buyer : the person who makes an actual purchase

User : the person who consumes or uses a product or
service

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© Prentice Hall, 2000
After purchase service
and evaluation
Purchase and delivery
Alternative evaluation,

negotiation and selection
Information search
(What? From whom?)

The Purchasing Decision-Making Model
Consumer Purchasing Decision-Making
(cont.)
Need identification
(Recognition)

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© Prentice Hall, 2000
Model of Internet Consumer Satisfaction
Customer
Satisfaction
Logistics Support
Customer Service
Pricing Attractiveness
Web-site Store Front
3rd Party
Seal of Approval
Trust in
Web-shopping
Vendor
Reputation
Repeat Web Purchase
(Brand Loyalty)
Security
Authentication
Privacy Transaction

Safety
Non-repudiationIntegrity
System
Reliability
Speed of
Operation
Ease of
Use
Content,
Quality
Format
Reliability
Completeness
Timeliness

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© Prentice Hall, 2000
One-to-One Marketing

Relationship marketing

“Overt attempt of exchange partners to build a long
term association, characterized by purposeful
cooperation and mutual dependence on the
development of social, as well as structural, bonds”

“Treat different customers differently”

Able to change the manner its products are
configured or its service is delivered, based on the

individual needs of individual customers

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© Prentice Hall, 2000
One-to-One Marketing (c ont.)

Customer loyalty

Purchase behavior

One of the most significant contributors to profitability

Increase profits; strengthen market position; become
less sensitive to price competition; increase cross-
selling success; save cost, etc.

Real world examples

1-800-FLOWERS

Amazon.com

Federal Express (FedEx)

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© Prentice Hall, 2000

Building and maintaining customer loyalty
One-to-One Marketing (c ont.)


Maintain continuous interactions between
consumers and business

Make a commitment to provide all aspects of the
business online

Build different sites for different levels of
customers

Willing to invest capital, both human and
financial, in the information systems, to insure
continuous improvement in the supporting
technology as it becomes available

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© Prentice Hall, 2000

Building and maintaining customer loyalty
One-to-One Marketing (c ont.)

Make a commitment to use the information
collected about customers in an ethical manner

Realistic managerial expectations in the payback
period and cost recovery

Set acceptable standards for response time in
customer service (24-48 hours); Use intelligent
agents to expedite and standardize responses
whenever possible


Ability to change and customize information and
services quickly and inexpensively is a must

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© Prentice Hall, 2000

Customer Service

A new look and feel
Install Web servers
which allow each
customer to create
individual web pages
that can be customized
to record purchases
and preferences
Put the burden on the
customer to treat a
problem or inquiry and
receive information
bit by bit
One-to-One Marketing (c ont.)

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© Prentice Hall, 2000

Customer Service
ISFLAVIA:
ISFLAVIA:

One-to-One Marketing (c ont.)

Information can be directed to the customer efficiently

Creation of a database which records purchases,
problems and requests is facilitated

Information can now be traced and analyzed for
immediate response

If customer service options and solutions do not maintain
the same level of excitement and interaction as the
advertising and sales presentations, the level of intensity
declines and the vendor runs the risk of losing customers
Implementing Customer Service in
Cyberspace

Product Life Cycle

Phase 1. Requirements : assisting the customer
to determine needs

Phase 2. Acquisition : helping the customer to
acquire a product or
service

Phase 3. Ownership : supporting the customer on
an ongoing basis

Phase 4. Retirement : helping the client to

dispose of a service or
product
© Prentice Hall, 2000 20

Types of Customer Service Functions
Implementing Customer Service in
Cyberspace (cont.)

Answering customer inquires

Providing technical and other information

Letting customers track accounts or order
status

Allowing customers to customize and
order online
© Prentice Hall, 2000 21

Addressing Individual Customer Needs
Doing
business
via Web
Companies
understand their
customers’ needs
and buying habits
better
Companies
customize their

future marketing
efforts
Implementing Customer Service in
Cyberspace (cont.)
© Prentice Hall, 2000 22

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© Prentice Hall, 2000
Tools of Customer Service

Personalized Web Pages

used to record purchases and preference

direct customized information to customers efficiently

Chat Room

discuss issues with company experts; with other
customers

E-mail

used to disseminate information, send product
information and conduct correspondence regarding any
topic, but mostly inquiries from customers

FAQs

not customized, no personalized feeling and contribution

to relationship marketing

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© Prentice Hall, 2000

Help Desks and Call Centers
Tools of Customer Service (cont.)

A comprehensive customer service entity

EC vendors take care of customer service issues
communicated through various contact channels

Telewebs

combines Web channels, such as automated e-mail reply,
Web knowledge bases and portal-like self service with call
center agents or field service personnel

Internet

a medium of instant gratification

demand for both prompt replies and proactive alerts

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© Prentice Hall, 2000
Market Research for EC

Aims

Problem definition
and
Research
objectives
Research
methodology,
Data collection
plan
Data
collection,
Data analysis
Results,
Recommendations,
Implementation

Finding relationship between consumers, products,
marketing methods, and marketers through
information in order to discover marketing
opportunities and issues, to establish marketing
plans, to better understand the purchasing process,
and to evaluate marketing performance

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