E-Commerce

TABLE OF CONTENTS

Page

1. Summary 3

2. Introduction 3

2.1 E-commerce consumer behaviour model 3

3. Intervening Variables 5

3.1 Customer service 5

3.2 Advertising 9

4. Conclusions 13

5. Bibliography 14

6. Appendix A - Growth in Web advertising in millions of dollars per year 15

7. Appendix B - Consumer Information Processing Model of Choice 16

1. Summary

This report presents briefly the generic e-commerce consumer behavior model. Its task is to show different ways the companies may use to win a customer and increase their profits concentrating on "intervening variables" represented in the model as far as E-commerce is concerned. The work is divided into three main parts. The introduction leads in the reader into general consumer behavior model. The main part concentrates on vendor controlled techniques of reaching clients and keeping them with the company and in the end it's summing up the figures in the conclusion section.

2. Introduction

The omnipresent nature of the internet and its universal access makes it an excellent platform for communicating more effectively with customers. To become a successful e-business initiative the company has to figure out how to lure costumers first and how to keep them without relaying on face-to-face interactions further. For marketers, the consumers are the natural starting-point for all decision-making. The consumers are at the centre of everything the marketing-oriented company does or plans: presumably, therefore, understanding how people think and behave in purchase situations is essential to the success of a company. It is impossible to predict all clients' decisions but knowing the e-commerce consumer behaviour model enable the firm to increase its sales together with reducing the retailing costs.

2.1 E-commerce consumer behaviour model

Economists tell us that people buy in order to maximise utility and obtain "best value for money". Marketers tell us that the decision-making process is not necessarily based on economics. In fact, very few people consistently buy the cheapest version in the product class. The model shows us that final customer decision depends on three factors:

- Independent variables, the company cannot control or influence

o Personal characteristics such as: age, gender, education, ethnicity, lifestyle, psychological, knowledge, values, personality

o Environmental characteristics such as: social, cultural, legal, institutional, governmental

- Intervening variables, the company can control and influence

o Stimulated by market such as: price, brand, promotions, advertising, product quality, design

o E-commerce systems such as: logistic support (payments, delivery), technical support (web design and content, intelligent agents, security), customer service (FAQs, e-mail, call centres, one-to-one contacts)

All these factors lead the consumer to the decision process. Buying behaviour can be defined as acts of people involved in buying and using products. A few models are known trying to capture the customer buying behaviour (Howard - Sheth model , Blackwell model , the Bettman information - processing model etc.), though they all have some similar attributes that should be regarded as the fundamental stages upon which the consumers' behaviour is developed and expressed. They are:

I. Problem Recognition: This stage characterises the awareness of the consumer's need. It establishes the 'barrier' between the desired state and the actual condition. Within this stage the marketer can stimulate the consumer through product information.

II. Information Search: This stage is divided in a two possibilities. It involves an Internal Search (Memory) in order to retrieve information which will support the process and/or an External Search if it is believed that further information is needed. Once again the role of the marketer could arise once the consumer is in the External Search phase. The result of this stage is the development of the possible alternatives.

III. Evaluation of Alternatives: This stage is concerned with the Consumer's need to establish criteria in order to enable the evaluation. The role of the marketer is also appearing in this stage by trying to 'shade' the alternatives. This stage might sometimes lead one step back, to the Information Search stage, if the consumer is not satisfied with the existing knowledge.

IV. Purchase Decision: This stage is the process of choice among the possible alternatives basically based on four main marketing factors. (Product, Price, Place, Promotion)

V. Purchase: This stage differs from the one mentioned above only in the time dimension. Even though the decision could be made the actual purchase might take place after a period of time (e.g. due to product availability).

VI. Post Purchase Evaluation: This stage is concerned with the satisfaction or

dissatisfaction after a purchase is made, based on the rightfulness of the decision. The impact of that stage can be reduced by warranties, after sales communication, etc.

Some of the factors mentioned above can be controlled by the firm so that it can influence on customer but the final decisions, buy or not, what to buy, where from and finally for how much, always are up to the current client. They are called Dependent variables.

3. Intervening variables

This paper will concentrate on the most important part of the e-commerce consumer behaviour model as far as the company view is concerned. The vender controlled variables gives a great opportunity to win a customer. Among all of them, two should be paid a large attention to: Customer service and Advertising.

3.1 Customer service