Download Consumer Behavior Online

Chapter 4
Consumer Behavior,
Customer Service, and
Advertising
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Learning Objectives
Describe the factors that influence consumer behavior
online
Understand the decision-making process of consumer
purchasing online
Describe how companies are building one-to-one
relationships with customers
Discuss the issues of e-loyalty and e-trust in EC
Explain how personalization is accomplished online
Describe consumer market research in EC
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Learning Objectives (cont.)
Explain the implementation of customer service online
and describe its tools
Describe the objectives of Web advertising and its
characteristics
Describe the major advertising methods used on the
Web
Describe various online promotions
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Exhibit 4.1
EC Consumer Behavior Model
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Consumer Behavior Online
Consumer types
individual consumers who commands most of the
media’s attention
Organizational buyers
Governments and public organizations
Private corporations
Resellers
Consumer behavior viewed in terms of:
Why is the consumer shopping?
How does the consumer benefit from shopping
online?
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Variables in the
Purchasing Environment
Social variables—people are influenced by:
Family members, friends, co-workers, “what’s in
fashion this year”
Cultural/community variables—where the
consumer lives
Other environmental variables:
Available information, government regulations,
legal constraints, situational factors
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Consumer Purchasing Decision Making
Roles people play in decision-making
Initiator—suggests/thinks of buying a
particular product or service
Influencer—advice/views carry weight in
making a final buying decision
Decider—makes a buying decision or any part
of it
Buyer—makes the actual purchase
User—consumes or uses a product or service
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General Purchasing
Decision-Making Model
5 major phases of a general
model
1. Need identification
2. Information search
3. Evaluation of alternatives
4. Purchase and deliver
5. After-purchase evaluation
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How One-to-One
Relationships Are Practiced
One-to-One marketing: Marketing that treats
each customer in a unique way.
Relationships as a two-way street:
Customer information is collected and placed
in a database
Customer’s profile is developed and …
Generate “four P’s” of marketing:
Product
Place
Price
Promotion
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Exhibit 4.5
The New Marketing Model
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How One-to-One
Relationships Are Practiced (cont.)
Doing business over the Internet enables
companies to:
Communicate better with customers
Understand customers’ needs and buying
habits better
Improve and customize their future
marketing efforts
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Personalization
Personalization—the matching of services,
products, and advertising content to individual
consumer
User profile —the requirements, preferences,
behaviors, and demographic traits of a particular
customer
Cookie—a data file that is placed on a user’s
hard drive by a Web server, frequently without
disclosure or the user’s consent, that collects
information about the user’s activities at a site
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Personalization (cont.)
Major strategies used to compile user
profiles include:
Solicit information directly from the user.
Use cookies or other methods to observe
what people are doing online
Perform marketing research
Build from previous purchase patterns
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Collaborative Filtering
Collaborative filtering—a personalization
method that uses customer data to predict,
based on formulas derived from behavioral
studies, what other products or services a
customer may enjoy; predictions can be
extended to other customers with similar
profiles
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Customer Loyalty & E-Loyalty
Customer loyalty—degree to which customer stays
with vendor or brand
Important element in consumer purchasing
behavior
One of the most significant contributors to
profitability
E-loyalty—customer’s loyalty to an e-tailer
Learn about customers’ needs
Interact with customers
Provide customer service
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Trust in EC
Trust—psychological status of involved parties
who are willing to pursue further interactions
to achieve a planned goal
EC vendors must establish high levels of
trust with current and potential customers
Particularly important in global EC
transactions
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How to Increase EC Trust
Trust can be decreased by:
Any user uncertainty regarding the
technology
Lack of initial face-to-face interactions
Lack of enthusiasm among the parties
Brand recognition is very important in EC trust
EC security mechanisms can also help solidify
trust
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Market Research for EC
Market research includes gathering information about:
Distribution
Competition
Promotion
Consumer
purchasing
behavior
Economy
Industry
Firms
Products
Pricing
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Market Research for EC (cont.)
Various tools are used to conduct
consumer market research:
Questionnaires
Surveyors
Telephone surveys
Focus groups
Important first to understand how groups
of consumers are classified
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Market Segmentation
Market segmentation—process of dividing a consumer market
into logical groups for conducting marketing research,
advertising, and sales
Geography
Demographics
Psychographics (Lifestyle)
Benefits sought
Powerful tool for research regarding:
Consumer behavior
Discover of new markets
Consumer interest in new products
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What Are We Looking For in
EC Market Research?
Online market research
attempts to find:
Purchase patterns for
individuals and groups
Factors that encourage
online purchasing
How to identify real
buyers and browsers
How an individual
navigates
Optimal Web page design
Major factors used for
prediction are:
Product information
requested
Number of related emails
Number of orders made
What products/services
are ordered
Gender
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EC Market Research (cont.)
Interactive Internet-based market research
Allows personal contact with customers
Provides marketing organizations with greater
ability to understand customer, market, and
competition
Identify early shifts in product and customer
trends
Enables marketers to identify products and
marketing opportunities
Develop products that customers really want to
buy
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Online Market Research Methods
Web-based surveys
Free software to create survey forms and
analyze results is available at
supersurvey.com
websurveyor.com
Online focus groups—help overcome some
problems that limit the effectiveness of Webbased surveys (sample size, partial
responses)
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Online
Market Research Methods (cont.)
Tracking customer movements—learn about customers by
observing their behavior rather than by asking them
questions
transaction log
A record of user activities at a company’s Web site
clickstream behavior
Customer movements on the Internet
Web bugs
Tiny graphics files embedded in e-mail messages and
in Web sites that transmit information about users and
their movements to a Web server
spyware
Software that gathers user information over an
Internet connection Prentice
without
the user’s knowledge 24
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Limitations of Online
Market Research Methods
Accuracy of responses
Loss of respondents because of equipment
problems
Ethics and legality of Web tracking
Focus group responses can lose something in
the translation from an in-person group to an
online group
Eye contact and body language are lost
Anonymity is necessary to elicit an unguarded
response
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Data Mining
Data mining—the process of searching a large database to
discover previously unknown patterns; automates the process
of finding predictive information
New business opportunities generated by conducting:
Automated prediction of trends and behaviors
Automated discovery of previously unknown patterns and
relationships
Sample data mining applications
Retailing and sales distribution
Banking
Airlines
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Web Mining
Web mining—application of data mining
techniques to discover meaningful patterns,
profiles, and trends from both the content
and usage of Web sites
Web content mining – discovering info
from web documents.
Web usage mining – analyzing Web
access logs
Web mining is critical for EC due to the
large number of visitors to EC sites
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Limitations of
Online Market Research
Lack of representativeness in samples of
online users
Online shoppers tend to be wealthy, employed,
and well educated; results may not be extendable
to other markets
The right kind of sampling is achieved
through verification of target audience or
demographic
Anonymity causes a loss of information about
demographics and characteristics of the
respondents
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Delivering Customer Service
in Cyberspace
Customer service—a series of activities designed to
enhance customer satisfaction (the feeling that a
product or service has met the customer’s
expectations)
Traditional: do the work for the customer
EC delivered: gives tools to the customer to do the work
for him/herself
E-service—customer services supplied over the
Internet. Three levels of e-services:
Foundation of service
Customer-centered services
Value-added services
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Delivering Customer Service
in Cyberspace (cont.)
Value chain for Internet service
Customer acquisition (pre-purchase support)
Customer support during purchase—provides a
shopping environment that is efficient, informative,
productive
Customer fulfillment (purchase dispatch)—timely
delivery
Customer continuance support (post- purchase)—
maintain the customer relationship between
purchases
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Customer Relationship Management
Customer relationship management (CRM)—a
customer service approach that focuses on building
long-term and sustainable customer relationships
that add value both for the customer and the
company
Building a customer-centered EC strategy
Focus on the end customer
Systems and business processes designed for ease
of use
Foster customer loyalty
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Customer Service Tools
Personalized Web pages
Used to record purchases and preference
Direct customized information to customers efficiently
E-mail and automated response
Disseminate general information
Send specific product information
Conduct correspondence regarding any topic
(mostly inquiries from customers)
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Customer Service Tools (cont.)
Call center—a comprehensive service
entity in which EC vendors address
customer service issues communicated
through various contact channels
Telewebs—call centers that combine
Web channels with portal-like selfservice; combine
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Metrics
Metrics—measures of performance; may be
quantitative or qualitative
Security and privacy
On-time order
fulfillment
Return policy
Navigability
Response times
Site availability
Download times
Timeliness
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Web Advertising
Advertising is an attempt to disseminate
information in order to affect a buyer-seller
transaction
Interactive marketing—marketing that allows
a consumer to interact with an online seller
Two-way communication and e-mail capabilities
Vendors also can target specific groups and
individuals
Enables truly one-to-one advertising
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Internet Advertising Terminology
Ad views—number of times users call up a page
that has a banner on it during a specific time
period; known as impressions or page views.
Button—a small banner that is linked to a Web
site
Page—HTML document
Click—a count made each time a visitor clicks on
an advertising banner to access the advertiser ‘s
Web site (ad clicks and click throughs)
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Internet Advertising Terminology (cont.)
CPM (cost per thousand impressions)—fee an
advertiser pays for each 1,000 times a page
with a banner ad is viewed
Hit—request for data from a Web page or file
Visit—a series of requests during one
navigation of a Web a site; a pause of request
for a certain length of time ends a visit
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Why Internet Advertisement?
3/4 of PC users gave up some television time
Well educated, high-income Internet users
are a desired target for advertisers
Internet is by far the fastest growing
communication medium
Advertisers are interested in a medium with
such potential reach, both locally and
globally
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Why Internet Advertisement? (cont.)
Cost
Online ads are cheaper than those in other media
Ads can be updated at any time with minimal cost
Richness of format
Use of text, audio, graphics, and animation
Games, entertainment, and promotions are easily
combined in online ads
Personalization
Can be interactive
Can target specific interest groups and/or individuals
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Exhibit 4.11
Adoption Curves for Various Media
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Advertising Networks
Advertising networks (ad server networks)—
specialized firms that offer customized Web
advertising, such as brokering ads and helping
target ads to selected groups of consumers
One-to-one targeted ads and marketing can
be:
Expensive
Very rewarding
Very effective
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Advertisement Methods
Banner--on a Web page, a graphic advertising
display linked to the advertiser’s Web page
Keyword banners
Random banners
Benefits of banner ads
Customized to the target audience or one-to-one
ads
Utilize “force advertising” marketing strategy
Direct link to advertiser
Multi media capabilities
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Advertisement Methods (cont.)
Limitations of banner ads
High cost
Click ratio—the ratio between the number of
clicks on a banner ad and the number of times
it is seen by viewers; measures the success of
a banner in attracting visitors to click on the
ad
Declining click ratio—viewers have become
immune to banners
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Advertisement Methods (cont.)
Banner swapping—an agreement between two
companies to each display the other’s banner
ad on its Web site
Direct link between one site to the other site
Ad space bartering
Banner exchanges—markets in which companies
can trade or exchange placement of banner ads
on each other’s Web sites (bcentral.com)
Credit ratio of approximately 2:1
Still the largest Internet advertising medium
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Advertisement Methods (cont.)
Pop-under ad—an ad that appears underneath
the current browser window, so when the user
closes the active window, they see the ad
Interstitials– an initial Web page or a portion of it
that is used to capture the user’s attention for a
short time while other content is loading
E-mail
Several million users may be reached directly
Problems: junk mail, spamming
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Advertisement Methods (cont.)
Advertising in chat rooms
Virtual meeting ground
Free addition to a business site
Allows advertisers to cycle through messages and
target the chatter again and again
Advertising can become more thematic
More effective than banners
Used for one-to-one connections
Advertorial—an advertisement “disguised” to look
like an editorial or general information
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Advertising Strategies
Associated ad display (text links)—an advertising
strategy that displays a banner ad related to a
term entered in a search engine
Ads as a commodity—direct payment made by the
advertisers for ads viewed
Viral marketing (advocacy marketing)—word-ofmouth marketing by which customers promote a
product or service by telling others about it
Customizing ads—one-to-one advertisement
(Webcasting)
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Online events, promotions, and
attractions
Online events, promotions, and
attractions
Promotions designed to attract visitors are
regular events on thousands of Web sites
Contests
Quizzes
Coupons
Giveaways
Bargains on the Internet
Lottery
Free samples
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