Consumers?�� decision making process in online environments

Although the principles of the process are similar, in online shopping environments the consumer’s decision-making process varies, with some advantages and some disadvantages as well. In this article I will specify those variations.

When trying to understand the online consumer behavior, we first need to know the Internet audience – who uses the web, who shops, and why they buy?

In general, Internet usage rate is constantly rising, although in the past few years the growth rate has decreased. People who go online engage in a wide set of activities varying from sending e-mail, to browsing for fun, and getting news.

The demographic profile of Internet and e-commerce has changed since 1995. Up until 1999, single, young, college-educated males with high incomes dominated the web. In recent years, there has been an increase in Internet usage by females, minorities, and families with modest incomes.

What’s new about online purchasing is the new marketing communications capabilities afforded by the web - community tools, chat rooms, forums, banner ads, e-mails, search engines, and online product reviews. The web offers the marketer a vast array of marketing options to approach his consumer, and supply him with a very rich information and purchasing environment.

Consumer behavior online and offline have both similarities and differences. The stages of the consumer decision process are basically the same whether online or offline. However, there are still a few modifications to the model requiring taking into account new factors.

The point is that in order to influence the customer’s decision-making process, the planner of B2C marketing needs to consider a web-purchasing decision making process, which is quite similar to the traditional model, but not exactly the same.

1. Need recognition
A key difference with use of the Internet as a marketing medium is that the consumer has more control of the information. TV commercials, for example, show the marketer’s choice, while when searching the web, the consumer can decide what he wants to know, and at what order of importance. Unless the consumer experiences a felt need, he will not necessarily access various pages to learn about new products the way he may notice them on store shelves or on TV commercial ads. Therefore, marketing tools traditionally used to arouse a sense of need must be reconsidered.

Need recognition has so far been stimulated by mass media, TV, Radio and print media. In online environments, the stimulants are: targeted banner ads, targeted event promotions and newsgroups discussions, as well as shopping agents and event notification services. The latter two services help the online shopper in identifying an opportunity to purchase the required product at a specific price, when available.

2. Information Search
Under the traditional model, consumers exert varying levels of energy to seek out and process information as they learn about the products available from which they will eventually choose.
The Internet makes the information search much easier:

- Through the use of newsgroups consumers can interact with other consumers and exchange all negative and positive product information freely –this third party information is considered the most credible by consumers. Newsgroups also supply the marketers with critical information as to their products.

- Visiting multiple online shops is much easier than visiting a number of physical shops. Furthermore, with one click the consumer can access more detailed product information, or just move to another e-shop. This nonlinear process allows nearly unlimited freedom of choice, and greater control for the consumer in comparison to physical stores and shopping.
Current research indicates that users believe that websites provide better purchase related information than traditional vendors .

- Comparative shopping is made easier as all alternatives are presented in close proximity to one another. Thus search costs are again reduced.
During this stage, online product search and comparison engines can be very helpful, as well as virtual catalogs, structured Q&A sessions, Links to external sources, web directories, external & website internal search mechanisms, and focused directories and information brokers.

3. Evaluation of alternatives
Alternative evaluation is the comparison of brands against standards and specifications set by consumers. For high-risk products, where there is a use of compensatory strategies to determine the preferred brand, the Internet can make those decisions automatic.

In the case of too many brands to evaluate, or a low risk product, consumers usually use heuristics (brand name for example) for their choice. In an evaluation cost-free environment, those heuristics are reduced .

Marketers find that arenas of differentiation based on perception or heuristics fade quickly as consumers gain easy access to comparative information.

Trial is an important part of the consumer decision-making process, and it reduces consumer’s risk. Where the product can be delivered online (e-book, software), the Internet can support trial in the form of a trial period, or a demo edition. In other products, the Internet serves as an information-defined transaction space, where information about products replaces products .
The specific tools for evaluation of alternatives when shopping online consist of FAQs, samples and trials, consumer testimonials, Newsgroups discussions, and cross- site comparisons.

4. The Purchase Decision
Making a physical purchase is for many people associated with disdain - standing in line, stock outs, and crowds are a few aspects many consumers would gladly give up . The Internet eases all those aspects of the purchase process, and more:

- The consumer may post an online question directly to the provider, who usually has more expertise than the retailer.

- The order is scanned online, credit card is also checked as well as stocks, and the customer receives a detailed purchase authentication containing shipment date which he can follow online.
In this stage, what assists the purchase progress are billing and delivery arrangements, electronic cash and virtual banking, and logistics providers and package tracking options. Convenience in ordering, payment and receipt of goods is a major competitive factor. Responses to inquiries directly from the manufacturer are with some products viewed by customers as a key advantage to shopping online.

5. The Purchase Evaluation
Conventional wisdom is that a dissatisfied customer will tell nine of his friends of a negative experience – now he has the ability to tell 10,000 potential customers or so worldwide. Warning e-mails and newsletters regarding bugs in specific software were spread within the shortest period of time, to a nearly unlimited number of peers. Shoppers seeking advice on a product purchase simply post a question to a newsgroup and receive detailed account of others’ past experience.
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Bibliography:

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