Online Shopping

ASSIGNMENT NO.1

FACTORS AFFECTING CONSUMER BEHAVIOUR WHILE SHOPPING ONLINE

SUBJECT CODE :- MGN504

SUBMITTED BY-

PRIYANJALI SRIVASTAVA

REG. NO. - 11200674

MBA(Q1202)

ABSTRACT

This study examines online search pattern and buying behaviour of consumers. People/customers search moderately for product/service information with company websites being the most popular mode of searching. Books, airline and railway tickets, hotel booking, apparel purchase are the products and services commonly purchased to satisfy self-fulfillment and affiliation needs. Respondents who have online purchase experiences have a higher intention to make online purchase in the future. There is no gender difference in terms of the frequency of online search and purchase as well as the type of consumer needs being satisfied over the Internet. Implications of the research findings and suggestions for future research are discussed. This study attempts to analyze the features related to the buying behaviour of online shoppers. Consumer buying behaviour in respect of online shopping was studied using different socio-economic variables. It also provides a support that helps researchers understand the drivers of consumers’ attitude and goal to shop on the Internet, and consumers’ perceptions regarding ease of use and usefulness.

Consumers are playing an important role in online shopping. The increasing use of Internet by the younger generation in India provides an emerging prospect for online retailers. If online retailers know the factors affecting Indian consumers’ buying behaviour, and the associations between these factors and type of online buyers, then they can further develop their marketing strategies to convert potential customers into active ones.

INTRODUCTION

There has been a rapid growth in the use of Internet since its introduction in the early 1980s. The Internet has grown tremendously in both its applications and number of users mainly due to its unique characteristics of flexibility, interactivity, and personalisation. It has been a very useful tool for communication, entertainment, education, and electronic trade. With the increased Internet access both at home and in schools, the number of Internet users will continue to grow.The revolutionary change brought forth by the computer and information technology has an important impact on consumers’ daily lives. On the business side, the Internet has transformed the way businesses are run. It allows retailers to offer an unlimited range of products and services to all consumers from around the world at any point in time. It is deemed to be the most significant direct marketing channel for the global marketplace.

On the consumer side, the Internet has given consumers more control in accessing information on products and services. Consumers pull for online content—they decide when, where, what, and how much commercial content they wish to view. The Internet enables consumers to access a wide range of products and services from companies around the world, and it has reduced the time and effort that they spend on shopping .Consumers play a much more active role in searching for information online to accomplish a certain purpose or goal. They access the Internet with that goal in mind, and that goal can influence individual behaviours and responses to online information. Consequently, researchers should explore why people go online and what activities they do online .Given the significant growth and optimistic outlook for the future of online shopping, it is important to examine consumers’ behaviours in relation to online purchase. The present study attempts to investigate consumer online behaviours in India.

The report by Internet and Mobile Association of India ( IAMAI) said, "the number of claimed Internet users has seen a growth of 16 per cent over last year. This number has grown up to 150 million by December 2012." It added that Internet usage in the country is still driven by the youth and mobile is coming up as a major avenue for Internet access and is redefining how the users stay online. "Thanks to this trend, we see a huge spike in the frequency of Internet usage from a mere 28 per cent of the users in 2011 accessing Internet daily to 54 per cent users now," the report said. Email and social networking are the most popular purposes of Internet access and are the main triggers for bringing people on this platform, it said . "Continuing previous years ' trends, school going kids, college students and young men continue to account for the maximum Internet users in the country with about 70 per cent of all active Internet users in urban India," the report added. At the present scenario internet users are not restricted to only e-mails and social networking but their interest has shifted towards online shopping and services. This growth is seen as it saves a lot of time in today’s busy schedule. But this doesn’t mean that purchase products or services in haste or by copying others or other silly factors rather we must give time and think critically about our needs and all the pros and cons of various products then make any decision. The process of identifying the desired product while going through the various factors is known as CONSUMER BEHAVIOUR.

Consumer behaviour is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people 's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. In the traditional business setting, consumers may evaluate the quality of products by looking, touching, and feeling the products. However, these traditional ways of searching for more information are not available online. Therefore, product uncertainty may become a particularly important dimension in a consumer’s online purchasing decision, depending on the degree of incomplete information associated with the product. This uncertainty has been considered a major barrier to online transactions and an inextricable factor in understanding trust .

For example, does customer service still matter when the product is a search good? Does website design matter more for experience goods than for search goods? Is customer service more important when the retailer is lesserknown? In short, we investigate the exact role these retailer characteristics play in the relationship between uncertainty/ visibility and customer satisfaction. A systematic exploration of how retailers can manage these characteristics to mitigate the negative effects of uncertainty and low visibility on customer satisfaction will shed light on how to use these variables to shape a firm’s online strategy and adjust its investments.

STATEMENT OF OBJECTIVES

• To describe the factors that influence consumer behavior online.

• To understand the decision-making process of consumer purchasing online.

• To discover the key factors that influence online buying behaviour of consumers in India.

VARIABLES

➢ Consumer preference

➢ Consumer satisfaction

➢ Price

➢ Time factor

➢ Decision making

➢ Quality of service

➢ Quality of products

➢ Product uncertainity

➢ Brand image

➢ Market value

➢ Product uncertainity

➢ Advertisement

➢ Online shopping

➢ Buying behaviour

➢ Customer attitudes

➢ Perceived risks

➢ Customer behaviour

➢ Websites

➢ Secure payment gateway

➢ Trust

➢ Product delivery

REVIEW LITERATURE

Online Shopping and Online Stores :- Compared to physical stores, online stores have many advantages: They are convenient and time saving and no more traveling and waiting in lines is needed. They are open all time and they are accessible anytime and anywhere. These stores provide consumers with free and rich information about products and services. They also have some online tools to help consumers compare and make purchase decisions among various products and services.

Simon Rigby, Head of DirectChannels at Comet, says, “Our challenge is to meet the needs of the greatest number of shoppers. By undertaking research on a regular basis, we learn more about our customers’ shopping needs and styles. This

helps us to deliver all the necessary reassurances, product ranges and services.

Research summarized by Emarketer (2005) showed that the Internet applied a bigger influence than for offline media for electronics compared to that clothing, beauty or home

improvement as would be expected.

Hoffman and Novak (1996) indicated that interactivity is the key distinguishing feature between marketing communication on the Internet and traditional mass media. Today online consumers have more control and bargaining power than consumers of physical stores because the Internet offers more interactivities between consumers and product/service providers as well as greater availability of information about products

and services.

Internet Marketing has changed the way people buy and sell good and service. It has added lot of convenience and easy to

the whole process of buying. Internet buying prevalence is highest in the United States, where 93% of Internet users have bought on-line (Business Software Association, 2002), and it is growing rapidly in India as well (www.ebay.com).

Geissler and Zinkhan (1998) claimed that the Internet shifted the balance of power in favor of consumers as it became very easy for them to make shopping comparisons and evaluate alternatives without being pressured by salespeople. Online stores reduce transaction costs and have advantage for both consumers and vendors.

Benedict et al (2001) in his study on perceptions towards online shopping reveals that perceptions toward online shopping and intention to shop online are not only affected by ease of use, usefulness, and enjoyment, but also by exogenous factors like consumer traits,situational factors, product characteristics, previous online shopping experiences, and trust in online shopping.

Based on the study by Korgaonkar and Wolin(2002), consumers can be classified as heavy, medium, and light users of the Internet. The heavy users spend up to five hours per day on the Internet mainly in the evenings and nights, and they access the Internet everyday of the week. The medium users spend up to three hours per day on the Internet, primarily during evening and night hours but often on weekends. The light users spend about an hour per day on the Internet without a clear pattern in terms of the time of the day. Typically, consumers spend between one to three hours per day online and favour surfing the Internet regularly in the evening and at night during weekdays.

Davis (1993) in his study reveals that we build up such a framework based on previous research on consumer adoption of new self-service technologies and Internet shopping systems.

The research suggests that consumers’ perception toward Internet shopping first depends on the direct effects of relevant online shopping features.

Venkatesh (2000) online shopping “Computer playfulness” is the degree of cognitive spontaneity in computer interactions. Playful individuals may tend to underestimate the difficulty of the means or process of online shopping, because they quite simply enjoy the process and do not perceive it as being effortful compared to those who are less playful “Computer anxiety” is defined as an individual’s apprehension or even fear when she/he is faced with the possibility of using computers. This influences consumers’ perceptions regarding the “ease of use” of the Internet as a shopping medium in a negative way, since using a computer is one of the necessary requirements for online shopping.

Menon and Kahn (2002) Whereas “arousal” is the degree to which a person feels stimulated, active or alert during the online shopping experience. A pleasant or arousing experience will have carry-over effects on the next experience encountered.

If consumers are exposed initially to pleasing and arousing stimuli during their Internet shopping experience, they are then more likely to engage in subsequent shopping behavior: they will browse more,engage in more unplanned purchasing, and seek out more stimulating products and categories.

(Goldman Sachs, 2001)Price, quality of service and information, speed and reliability of delivery, ease of on-line ordering, and

trust towards vendors are important factors for consumers considering online purchases that will increasingly determine their propensity to engage in e-commerce.

Pavlou and Fygenson (2006) found that getting information and purchasing , two focal behaviours in the research and are significantly influenced by their respective intentions.

Last but not the least part of online shopping is delivery of product or service. Once a payment has been accepted the goods or services can be delivered in the following ways.

Downloading: This is the method often used for digital media products such as software, music, movies, or images.

Drop shipping: The order is passed to the manufacturer or third-party distributor, who ships the item directly to the consumer, bypassing the retailer 's physical location to save time, money, and space.

In-store pick-up: The customer orders online, finds a local store using locator software and picks the product up at the closest store. This is the method often used in the bricks and clicks business model.

Printing out, provision of a code for, or emailing of such items as admission tickets and scrip (e.g., gift certificates and coupons). The tickets, codes, or coupons may be redeemed at the appropriate physical or online premises and their content reviewed to verify their eligility (e.g., assurances that the right of admission or use is redeemed at the correct time and place, for the correct dollar amount, and for the correct number of uses).

Shipping: The product is shipped to the customer 's address or that of a customer-designated third party.

Will call, lCOBO (in Care Of Box Office), or "at the door" Pickup: The patron picks up pre-purchased tickets for an event, such as a play, sporting event, or concert, either just before the event or in advance. With the onset of the Internet and e-commerce sites, which allow customers to buy tickets online, the popularity of this service has increased.

RESEARCH METHODOLOGY

This report presents the research methodology to be adopted for the research topic “Factors affecting consumer behaviour while shopping online”. It will include selection of samples, collection of data and choice of statistical tools that will be used for the analysis of data.

TYPE OF RESEARCH

• Discriptive Research : it is used for finding out the facts. Descriptive research include surveys and fact finding enquiries. The major purpose of descriptive research is description of the as it exists at present. Descriptive research methods are pretty much as they sound — they describe situations. They do not make accurate predictions, and they do not determine cause and effect. There are three main types of descriptive methods:

1. Observational Method:- With the observational method (sometimes referred to as field observation) animal and human behavior is closely observed. There are two main categories of the observational method — naturalistic observation and laboratory observation.

2. Survey Method :-In survey method research, participants answer questions administered through interviews or questionnaires. After participants answer the questions, researchers describe the responses given. In order for the survey to be both reliable and valid it is important that the questions are constructed properly. Questions should be written so they are clear and easy to comprehend.

SAMPLING TECHNIQUE

Sampling procedure can be broadly divided into two categories:

• Random Sampling

• Non-Random sampling

In random sampling each unit of population has the same probability of being selected as a part of the sample. In non-random sampling members are not selected by chance. Some other factors like familiarity of the researcher with the subject,convenience etc. are the basis of selection.

Here, in this research we will be using NON-RANDOM SAMPLING technique.

Non-Random sampling considered to select sample in this research because as our topic is “factors affecting consumer behaviour while shopping online” so there are people who do not prefer online shopping . From the whole population we need selected sample only those who shop online therefore there cannot be equal chance for everyone to get selected. Hence, random sampling cannot be used.

Further non random sampling we would be using one of its method “Convenience Sampling” for collecting samples for this research.

CONVENIENCE SAMPLING

As the name suggests, in convenience sampling ,sample elements are selected based on the convenience of researcher. In this, researcher selects samples according to his convenience. Hence this eliminates the chance factor in the random selecting process.

In our research we will be using convenience sampling because our focus is only on those customers who shop online , they only can be the samples of our research. Therefore according to our convenience we visit only those people whom we know are online shoppers.

SAMPLING DESIGN

Sampling can be defined as the section of some part of an aggregate or totality on the basis of which judgement or an inference about aggregate or tatality is made. Sampling design helps in decision making in the following areas :-

Sample unit :- The sampling unit refers to” who is to be surveyed ?” In this research consumers who are internet purchasers will be focussed. For this study, Internet purchasers are defined as those who purchased at least one product or service through the Internet during the last 12 months.

Sample size :- the sample size will be 200-250 respondents.

Data Collection Methods

Both the primary and secondary data collection methods were

considered. The primary data will be collected by designing a questionnaire exclusively for the study. Secondary data was taken from Research papers, Journals, Magazines and Websites.

REFERENCES

Text Books, Magazines, Journals, Websites

Naval bajpai- Business Research Methods by Pearson publications , New Delhi

Kotler Philip, Marketing Management - Analysis, planning, Control, Prentice hall of Indian Pvt. Ltd., New Delhi.

Kothari C. R., Research Methodology Methods and Techniques, Wishwa Prakashan, New Delhi

Vijayasarathy, L.R. and Jones, J.M. (2000). Print and Internet catalog shopping: Assessing attitudes and intentions. Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 3, pp.191-202.

Kotha, S., Rajgopai, S., and Venkatachalam, M. 2004. “The Role of Online Buying Experience as a Competitive Advantage: Evidence from Third Party Rating for E-Commerce Firms,” Journal of Business (77:2), pp. 109-133.

Jun, M., Yang, Z., and Kim, D. 2004. “Customers’ Perceptions of Online Retailing Service Quality and Their Satisfaction,” The International Journal of Quality & Reliability Management (21:8), pp. 817-840.

Reibstein, D. J. 2002. “What Attracts Customers to Online Stores, and What Keeps Them Coming Back?” Journal of the Academy of Marketing Science (30:4), pp. 465-473.

D.Venkoba Rao - (Article) Determinants of Purchase Behaviour of Online Consumer Reader, Department of Business Management,Aristotle PG College, Hyderabad.

References: Text Books, Magazines, Journals, Websites Naval bajpai- Business Research Methods by Pearson publications , New Delhi Kotler Philip, Marketing Management - Analysis, planning, Control, Prentice hall of Indian Pvt. Ltd., New Delhi. Kothari C. R., Research Methodology Methods and Techniques, Wishwa Prakashan, New Delhi Vijayasarathy, L.R. and Jones, J.M. (2000). Print and Internet catalog shopping: Assessing attitudes and intentions. Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 3, pp.191-202. Kotha, S., Rajgopai, S., and Venkatachalam, M. 2004. “The Role of Online Buying Experience as a Competitive Advantage: Evidence from Third Party Rating for E-Commerce Firms,” Journal of Business (77:2), pp. 109-133. Jun, M., Yang, Z., and Kim, D. 2004. “Customers’ Perceptions of Online Retailing Service Quality and Their Satisfaction,” The International Journal of Quality & Reliability Management (21:8), pp. 817-840. Reibstein, D. J. 2002. “What Attracts Customers to Online Stores, and What Keeps Them Coming Back?” Journal of the Academy of Marketing Science (30:4), pp. 465-473. D.Venkoba Rao - (Article) Determinants of Purchase Behaviour of Online Consumer Reader, Department of Business Management,Aristotle PG College, Hyderabad.