CHAPTER 2: LITERATURE REVIEW

The literature about the different aspects of e consumer behavior was vital for the moving on

with this dissertation and knowing how exactly did the consumers thinks and what are the things

that influence them the most while making online purchase decisions.

Profile of online customer

According to Haris, (2009) e-shoppers used to be originally thought of as more functional and

utilitarian that other shoppers. According to the initial research conducted it was found out that

the profile of the online shopper was drastically different than that of a regular customer. A sort

of profile was described in the literature for an average e shopper. E-shoppers are found to be

more educated and enjoy higher socio economic status and are more attuned towards using the

internet with more knowledge of the latest technology. There may be many different types of

online consumers and the customer development model distinguishes five of them (Stormer,

2004). The purpose of the identifying them is to carry out differentiated market treatment

functions. The five types of customer are 1) the online surfer, 2) the online consumer 3) the

online presume 4) the online buyer and 5) the key online consumer.

A model that was particularly useful in regards to the consumer behavior if the e consumers as

was done by Charles (2009). The paper is based upon discursive research dealing with literature

relevant to the issue. The paper found out that the e-consumer behavior was significantly

different from that of the regular customers. The e customer was more likely to become attracted

to a website through factors such as the degree of reliability and interactivity.

What is found in that is different in the online world of shopping is that the roles of the customer

and the marketer are reversed Krishnamurthy, (2005) found out that in the new role it was the

customer who in the online world becomes the “protagonist” as they now perform the tasks for

themselves and they have greater control. They go to the websites themselves and can opt out

from them at any time they want.

One concept is that there is a difference between the e consumer behaviors in the differing

regions of the world. This plays from the concept that there would be a difference between high

and low context cultures in terms of the buying preferences and as we are looking for a low

context region there are several things that are only privy to those people. Therefore the focus

would have to according to the region and not a universal site should be created, instead there

should be a consensus on the type of region that the website is catering to and then made

accordingly. (Salvendy, 2008). An experiment conducted in a research was done to prove the

difference in preferences in reference to the high and low context culture in terms of electronic

retail (Salvendy, 2009). These results of the experiment prove that there is a stark difference

between the consumers in the high context cultures. Even with the same product there were

different preferences for both the cultures and this is something that is very important for the

retailers to realize in order for them to become more accustomed to their consumers and to info

out what is it that affects them.

Another interesting theory Gao, (2004) is that there needs to be a clear distinction between the

browsing and goal oriented behavior as this can be similar to actual shopping versus only

window shopping. The preferences of these two distance types of users are very different and

the companies need to make the distinction and apply tools in order to convert the consumers

who are only going to make purchases.

CONSUMER MODELS

A study that was very useful for my research was done by Leslie (2009). It was investigating the

e shopper’s quality, enjoyment and trust into the technology acceptance model (TAM) to

understand the general acceptance of e shopping amongst consumers. The result concludes that

the shopping environment and trust play a vital part in the consumer’s intention to shop.The

usefulness and the ease of use are two factors that play an important part in the consumer’s

attitude toward e retailing. (Shi, 2009). It always depends on the consumer’s perception and that

is the most important thing when it comes to the selling products online. The consumer

perception is very important and that comes from building trust amongst the consumers.

One research that used the model of elaborate likelihood model (ELM) was done by San (2011).

The model is explains that formation of individual attitudes that are prompted by central and

peripheral cues. The result of the study conducted propose the use of peripheral signals when the

buyer in not highly involved and central signals when the buyer is actually more involved.

Factors influencing E-consumers

Studies have also looked at the socio economic factors that affect the online consumer behavior

and what are their preferences according to these things. (RAJPUT, 2006). Viewing such a

medium as a form of new innovation in a study that looked at five factors namely gender, age,

income level, education level and the exposure to the Internet to see whether there was any

relationship between these five factors and the consumer’s willingness to adopt e-commerce. The

result shows that there is an effect of income level; education level and exposure to the Internet
on rate of adoption of e-commerce. However this study showed that the gender and the age of

consumers are not important factors for the adoption of e-commerce.

Online reviews play a big part in making consumers decision in the e- market this is due to the

fact that there are many consumers who look towards other consumers and rely on each other’s

preferences in order to make informed decisions about the product. (Karakaya, 2002). This

phenomenon is something that is really integrated towards the internet consumers and that is the

reason why this it is so integral towards the new e retail business.

In a study conducted Warrington, (2000) online repurchase intention model was looked at. The

research looked to find out if the intent to search the internet for information was a key element

in predicting the purchase decision of the consumers. The results pointed out that intention to

search the internet was the strongest predictor of the internet purchase decision.

A concept towards understanding the e consumers is Human computer interaction. (HCI)

(SHAW, 2004). This is the area of intersection between social science, physiological, computer

science and technology disciplines. HCI has become so popular because of its dynamic nature. It

continues to develop and incorporate new concepts and techniques in order for it to become more

whole some. The impact can be seen from the research that clearly points out that the user

satisfaction with websites increased when HCI was used in the construction of those websites.

The interaction of new elements such as sound has increased the global usability of those

websites. Therefore it can be concluded that the users prefer new ways of interaction such as

speech recognition. New technologies that make the consumer experience more interactive such

as close up pictures and comparison function known as image interactivity technology (IIT) have

a positive effect on the consumer perception of online retail environment. (Lee, 2006). The more
that the consumers feel that there is a real life like experience for them the more likely is that

they will shop again and again form that web source of the company. Interactive decisions told is

something that can really affect the decisions making of the online consumers in the retail market

(Trifts, 2002). The research pointed out that interactive told that were designed to assist

consumers in making their preferences had a positive impact on the quality and impact of the

purchase decision.

In order to successfully manage a relationship with the customers it is vital that corporate blogs

be used as tools for CRM. (Ahuja, 2009) .the advent of these type of interaction with the

consumer is vital for the proposed increases in the sales and the loyalty of the customers in order

for them to come back again and again to the same shop which is vitally important to the success

of a business.

Factors inhibiting consumers to adopt e commerce

One area of concern pointed out by Dillon, (2004) is the issue of privacy and the impact it has on

the consumer’s decision to make online purchases. Research conducted in this regard pointed out

to the fact that there are several factors that should be looked at by the companies in regard to

ensuring security to their online customers. Customer even prefers the intervention of the

government in order to achieve this aim. Protecting the data of the customers will really help

online retail stores increase their sales. The online purchase intention is strongly determined by

the attitudes towards online shopping and the trust in a company does not affect the attitude

directly but indirectly through reducing the perceived risk associated with that website.

(Creemers, 2001).Another author that discusses the risk involved in the online shopping and the

consumers attitudes towards actually buying the products (FERNANDEZ, A. 2001). The results
proved that consumers are more likely to shop online if their risk perception is very low and they

feel that the information shared by them would be absolutely secure. Risk is one continuing

theme that is relevant towards the consumers as another study also discusses risk as well as trust.

(Creemer, 2002). The result of this study were very useful and showed that the trust antecedent

perceived risk and the perceived ease of use both directly influence the attitudes towards

purchasing online. Trust is something that has hampered the growth of the e commerce because

consumers prefer to shop where their perceived risk is very low (Singh, 2002). The biggest

fear that the consumers have is providing their credit card information which is the main reason

that consumers have not yet shifted towards online retail and are still skeptical towards providing

personal information. This however can be reduced through a well-established brand that people

trust outside of the digital world and that is something that should be worked towards in order to

reduce the perceived risk of the customers. Trust is something that needs to be given great value

to and the effect of these needs to be substantiated through an empirical study. A study done by

McKechnie (2005) which build upon a model for the development and comes up with the

hypothesis that a consumer’s trust in an e retailer is positively related to the perceived reputation

of the retailer. The results of the study proved that indeed the hypothesis is true and that this is

the reason why the companies need to build upon its reputation in order for them to use this to

their advantage. Formation of trust is something that is repeated again and again in order to

attract and then keep the customers coming back to ensure that the business is performing well.

Yuan (2003) made the conclusion that trust was something that was due to the culmination of the

perceived informative and perceived entertainment contribute to the general trust in the e

commerce. The main point here is for the online companies to focus on the cognitive perceptions

in order to bring about a trust in e commerce.

One concern about most of the consumers is that they perceive the e-commerce as both artificial

and non-authentic. (Wells, 2002). This is a big problem for the websites as they have to retain

clients and with this in their mind it is very difficult to do so. A research done by explores how

brand reputation and word of mouth directly affect the consumer perceptions. The results of the

study revealed attribution and affected the word of mouth both positively and negatively. The

main thing discussed was the consumer perception and how it changes given changes in the price

bundling in the retail market.

Why online retailers fail

What many companies do is that they attract the customers but then fail to retain them.

(Reibstein, 2002). This is because they only focus on bringing the customers to their website and

not looking for way in order for them to keep coming back. This is very important as this is the

main reason why most retail company’s s fail. Only the successful ones can employ enough

resources and methods to gain long terms customers which are very important for a business.

One issue that retail websites constantly face is that the consumers hardly return to their website

and it is very difficult to retain them for a long time. (Dholakia, 2002). The research finds out

that the level of interactivity and the trust that the consumer have on the company will have a

positive effect on the consumers coming back into to the website. This however also looks at the

traditional characteristics such as age and sex to find out the differences in the behavior of online

shopping and does find that these too have an effect on online retail shopping.

Some of the reasons why many e shops fail are discussed by Flaherty, (2002). The reasons are

that sometimes the product details are missing so that the consumers are not able to get enough

knowledge about the product to make an informed decision. Another reason is that the operation
is often times very unreliable and can become dysfunctional with heavy traffic. Inconsistently is

also a big problem for the company and something that should be avoided at all costs. The

technological factor is also very important as the website needs to be constantly updated so that

the users feel that their experience is improving and that would definitely attract new customers.

One of the most important things that companies often mess up is the search function. It is

sometimes very outdated and complicated which makes the whole experience very bad for the

consumers and does not go at all with their references.

WEBSITE DEISGN

Geldenhuys (2005) discusses how the website should be designed in order for the consumers to

become more acquainted with it in terms of all the steps entailing actually making a purchase.

First the needs recognition can be made through the banner advertisements and discussions. Then

for the information search there should be virtual catalogues, for the evaluation there needs to be
comparison between different websites. For the actual purchase there needs to be the source of

electronic cash as well as virtual banking. The final step that ensures the consumers keep coming

back is the after purchase evaluation of the product bought through emails and newsgroups.

Grapping the word of mouth attention and getting the online shopper is very essential to the

website (Tiu, 2004). This proves that e shopper excitement leads increased positive word of

mouth marketing and most importantly increases the intent of return of the consumer which is

the main aim of the hosts of the website.

Consumer preferences

With the advent of the internet a lot of information is available on the market and therefore

consumers prefer channels of communication that customize information specifically for them

and make the whole experience fell interactive. (Steinfield, 2002). This step of interactivity is

what the consumer prefers and makes them at ease while buying electronics online.

The thing that marketers should do in order to make the consumer comfortable in order to attract

them more and really know their preferences is to facilitate consumer to consumer interaction

within the website Yalch, (2004). What the company can do to affectively attract the consumer is

to get them to interact with each other especially in the case of online electronic retail shopping.

Reading other consumers reviews and finding out what and how consumers have rated different
product through the use discussion forum is a very good way of dealing with the consumer

preferences.

A relationship between the e service quality, consumer satisfaction and attitudes towards the web

sites is something that was remained by a conceptual model by Jamie (2002). The paper comes

to the conclusion that the e service quality influences consumer attitudes as well as behavioral

intentions. The research also proposes that manager of e retailers should manage the content

driven services as well as maintaining quality of the e service. Another research that discusses

the service quality and satisfaction according to three consumer intentions word of mouth, site

revisit and purchase intention. The result revealed that e service quality has a positive impact on

e satisfaction and it also affects the site revisits and how the well the business performs.

According to Carson, (2002) there are both utilitarian and hedonic dimensions for retail

shopping but need to be adapted towards the internet. The result of the study showed that

navigation, convince, and the substitution of electronic environment to personally examine the

products were important indicator towards the shopping preferences of the online retail

consumers.

Building online customers’ loyalty

Buying environment characteristics which are not directly related to the price or information

about the product are related to the satisfaction of e consumer and therefore building loyalty

amongst those consumers. The finding of the research showed that there are three factors that

affect the satisfaction of the e customers directly and bring a sense of loyalty amongst them. The

three are buying environment, convenience and entertainment value.

Getting consumer satisfaction is the basic aim the on-line retail websites should have in order for

the customers to come back. Research done by Ballantine (2005) concludes that the level of

interactivity and the amount of information provided on that website have a direct and sign fact

effect on the consumer’s level of satisfaction.

Conclusion
The literature reviewed in context to the research topic was enough to make a general consensus

about the way to go on about the dissertation and to provide a solid basis for the study. This was

very important as the literature provided varying views about the subject. After reviewing the

literature the conclusion that can be sorted from this is that reduction of the perceived risk is

something that affects all online retail shoppers and the company needs to focus upon building a

stable image in order for the consumers to shop via them. The relationship between the

customer’s willingness to shop online and the preferences of the consumers relates directly with

the image of the company itself and how well is the website accustomed to the type of

consumers that it wishes to attract. This was a major finding as this proves that retail need to

understand their customers very well and to get them to come to their site repeatedly.