Globalization

SUMMARY

Relatively little research has been done about consumer behaviour online. In this essay I will compare whether a traditional model, the Five-Stage Model of the Consumer Buying Process, will still apply in an online perspective. The finding is that the traditional model can still be applied online but with consideration that different parts of the steps have changed and become more or less important. The main changes are that personal sources for information online have more or less completely been replaced by consumer rating pages, discussion forums and other faceless sources. The step of information search and evaluation of alternatives have become much easier for the consumers, which results in more searches being made prior to purchase, even for products that are regarded to have a lower risk. On the Internet the purchase decision step still remains the same but a couple of new reasons why consumers do not fulfill their purchase have arisen. These are the perceived risk of buying online and the attitude and education about computers and towards the Internet. Due to the ease of finding and spreading information online, the post-purchase behaviour has become increasingly important online compared to off-line since word of mouth can spread quickly and can influence a huge number of consumers. This combined with a fierce competition causes an increasing importance for the companies to keep customers satisfied

INTRODUCTION

When the Internet started to expand and there became a larger public interest in it, companies realised the opportunity and the importance of being seen online. Many companies put up a webpage without really know what to use it for apart from presenting company information. Today, a few years after the big Internet-hype in the late 1990's has calmed down, companies have discovered that the Internet can be a very useful tool for conducting business as well as displaying information about the company and its product and services. Just like in the late 90's when companies rushed online to create a webpage, but weren't really sure what to use it for, many companies today are selling products online without having a proper strategy. They offer products online but are not sure how the online consumers actually behave. Even though online companies are getting better on handling their customers, rather little is explored about consumer behaviour on the Internet. Off-line models and strategies of consumer behaviour might not always apply or might have to be modified in order to work online.

. Methodology

In this essay I will examine the traditional 'Five-Stage Model of the Consumer Buying Process' described by amongst others Kotler (Marketing Management 1997) and Solomon et al. (Consumer Behaviour - A European perspective) to explore whether the model is applicable online as well as off-line in a retail environment. I will do so by first describing the traditional model and thereafter applying it in and describing an online situation. I will do so with help of contemporary research and examples in the area of consumer behaviour both on- and off-line. I have chosen to examine 'The Five-Stage Model of the Consumer Buying Process' since it plays a central role in order to understand how the consumer reacts and behaves on the marketplace.

The dissertation is written for an international audience who has an interest in e-commerce and would like to gain further knowledge on how the consumer behaves in an online situation compared to shopping in a traditional, brick and mortar store. Even though I have tried to write this essay as simple and comprehensive as possible, some basic knowledge within the field of marketing is required in order to fully understand the content since I will not in detail describe concepts such as 'word of mouth' and 'push-strategy' etc.

The sources used in this essay have mainly been various research journals in order to get more accurate and up-to-date information, since new research within the field constantly appears. Many of the journals can be accessed on www.sciencedirect.com. The online sources that have been used are mainly large companies' websites who have been used for example purposes to illustrate the theory in practice. In the cases where online information has been used elsewhere, scientific portals have been used. Although one should generally be very skeptical about online sources, these websites are amongst the leading web-portals within the field of online marketing and e-commerce and can be regarded as fairly accurate and objective.

4. Theory

4.1 The Five-Stage Model of the Consumer Buying Process

The Five-Stage Model of the Consumer Buying Process is described by Phillip Kotler as a model of the 'typical buying process' (1997:192) and is a way to explain how consumers make their purchases. However, a consumer does not necessarily go through all steps and can in some cases even reverse the order of it (Kotler, 1997:192). An example of this is when a consumer buys a low-involvement product that is considered to have a low risk, i.e. washing-up liquid. Usually one has its preferred brand and will stick to this, even though there might be a great selection of other brands. In that case the consumer goes straight from the problem recognition stage direct to make the purchase decision, skipping the information search and evaluation of alternatives (Kotler 1997:192). There are also several other situations where this model does not fully apply, such as when consumers make spontaneous shopping, are under time pressure or have a certain attitude towards the product.

4.1.1 Problem Recognition

When a consumer discovers a difference between his or her actual state and the ideal state that is desired, an opportunity or a need is created (Solomon et al. 1999:211). An opportunity is recognised when a consumer desires a better or different product (Solomon et al. 1999:211), such as when a person buys a faster and more modern computer even though there are nothing wrong with the old one. A need occurs when the actual state falls below the ideal state (Solomon et al. 1999:211) such as when a consumer runs out of a good, is dissatisfied with a product or if a product suddenly breaks and needs replacement.