Understanding Consumer Behaviour to Develop Brand Loyalty
Info: 10137 words (41 pages) Dissertation
Published: 2nd Mar 2022
In today´s world, where self-satisfaction and self-interest is the main goal in consumers, people will pay for the privilege of being king (Dickins, 2008). Before, the consumer’s decision-making process illustrated specific stages prior to the final purchase (Belch and Belch, 1998), which was in fact affected by several factors. And tools such as PEST analysis and The Five Forces of Porter were used by marketers to clear determine their market and understand their consumers. Such tools are still useful but with the invention of the internet are not enough to determine trends or changes in consumer behaviours before they happen.
The daily increase in the adoption of the internet by consumers and businesses has changed the marketplace completely and turned it into a space where distribution and communication can be made between each other, thanks to the rapid growth of the internet and people using it (overpassing 4 billion around the world). So, the internet is a powerful force that can and will influence a consumer’s buying behaviour (MacGaughey and Mason, 1998).
Businesses that compete in the world of electronic commerce are simply one click away, that is why customers have the opportunity to compare and contrast all their options of product and services with a small amount of personal time in between (Srinivasan, Anderson & Ponnavalo, 2002), in other words competitors are one click away. The access on content and great amount of information to the consumer, lower search costs and exposure to competitors the internet has given people results in a change of behaviour from customers (Daniel and Klimis, 1999). But, at the same time that customers are evaluating their options they leave tracks and prints of their choices that can be followed by organizations step by step.
The current growth of B2C e-commerce has made clear the importance of building a loyal base of customers’ visitors to a website and hence increasing e-loyalty (Gommans, Krishnan and Scheffold, 2001). So, understanding online processes of decision-making can increase the knowledge that consumers go along, also mapping their interests, which could be useful in future predictions. For marketers, to gain that knowledge has become a key path to engage in with them and be aware of the entire end to end process until the final purchase. Therefore, data analytics and market research methods have a major role, those companies who have the ability to structure the data and interpret it will have access to important insights.
Even though companies can be aware of what their consumers are, much of the times they change, and as consumers’ attitudes change also technologies do. So, it is important to give the same weight to consumer behaviour research as well as tools to help organizations understand them and pursue brand loyalty as a goal, which is the over aim of this research study: to understand consumer behaviour and learn more on how companies are using internet and technologies as tools to gather information and generate brand loyalty.
1.2 Problem Statement
Since researchers and marketers are constantly trying to find new trends and spot new attitudes and behaviours before they happen, theories on market research such as PEST analysis and The Five Forces of Porter are not enough to help companies achieve their goals. And organisations are failing quickly in staying ahead of customers’ needs.
Because the internet is still relatively new as a tool for marketers, the understanding of its impact on consumers’ behaviours it is still vague and incomplete (McGaughey and Mason, 1998). And it is believed that in order to be on top in the future companies need to be aware of emerging trends and be prepared for them now, because certain trends will be exposed soon and have predictable paths but others will have a more surprising outcome (Benson-Armer, Noble and Thiel, 2015). But how will companies predict them?
Perhaps a combination of several tools such as PESTEL analysis and The Five Forces of Porter to gain knowledge on the markets will certainly still help. But, nowadays, it is important to add the consumer in that equation. New technologies such as the internet and big data analytics can provide that information for companies. With the help of the internet as a tool, organizations are going to be able to predict consumer behaviour and enhance loyalty by understanding first the journey and using the methods mentioned above could be the most efficient solution to a rapidly changing world.
1.3 Aims and Objectives of the research
The following research tries to generate knowledge on consumer behaviour by combining the tools that are being used by organizations to gather important and useful information on their consumers. By analysing how consumers choose through a set of brands in the internet, and how they let online channels affect their decisions, organizations can predict trends and changes, allowing them to develop a competitive advantage and, therefore, be ahead of their competitors.
A list of objectives was made to fulfil the aims of the study:
- To find the current tools and models that are being used in the market to understand consumer behaviour while buying online.
- To evaluate consumer behaviour when buying online.
- To investigate what type of tools marketers are using to elaborate strategies and make decisions regarding their consumers.
1.4 Research Question
The following research will try to answer the above question:
- How organisations find the information they require in order to predict consumer behaviour trends with the current environment tools and decision- making theories?
2. Literature review
2.1 Understanding online consumer behaviour
This section will introduce several theories regarding consumer behaviour, how different authors define it and most importantly how a consumer follows the process of decision-making. Finally, it will highlight the limitations this subject currently faces and make space for available studies.
How do customers decide? Studies of consumer behaviour started almost 300 years ago with several economists such as Bernoulli, von Neumman and Oskarwho, which examined how consumers made decisions regarding the economic man and introducing the utility theory, where the consumer based his decisions on what he is expecting the outcome to be (Richarme, 2007). Even though it was a good start, this theory has several limitations, why? Consumers are not always rational, nor consistent, and they rarely have all the information available to make a decision
Later on, the satisficing theory was introduced in the 1950s by Herbert Simon. This theory explains how consumers stop the process whenever they get what they want, in other words, when they are satisfied enough they do not look for other alternatives (Barges and Gehlbakc, 2012), and, therefore, not maximizing personal gain (Simon, 1957; Simon and Stedry, 1968). Since this particular theory already had several limitations as well, they continue to explore the consumer decision-making process and by the 1970s, two psychologists, Kahneman and Tversky, introduced the Prospect Theory. Two important elements were added to the above theory, value and endowment, where one product is more valuable if you own it (Richarme, 2007). So, people tend to evaluate the outcome in terms of gains and losses in comparison to their current situation or the demanding status quo (Oxford University, 2015).
Several theories and models where developed and Belch and Belch (1998), defined consumer behaviour not only as a process but also as an activity in which people engage when searching, selecting, buying, using, evaluating and throwing away products and services and therefore satisfying their needs and wants. In addition, they researched about how the purchase decision is a result of a long and detailed process that includes an extensive evaluation and search of information, product comparison, others (Belch and Belch, 1998). But on other scenarios the decision is more incidental, and may result from a little more than seeing a product promotion or discount in a store, making that an impulse decision (Belch and Belch, 1998)
It is clear how marketers manipulate the various principles of marketing in order to influence consumers, but then so do consumers, when they reach for information, choosing which brands to go with, which products and services to buy, and which ones not to buy, hence ignoring other brands (Richarme, 2007). Therefore, power is switched from the companies to the consumer, making consumer behaviour a valid and important study and that is why marketers research on it in an attempt to understand the factors that guide an impulse or an overthought purchase (Belch and Belch, 1998).
Research methods used in several disciplines are becoming more and more popular in business strategies to explore and understand better consumers’ purchasing motives (Belach and Belcha, 1998). These motives, attitudes and lifestyles are important to be understood to later on generate a marketing strategy worthy of functioning. There is a current need to understand how these attitudes are formed or changed, what methods consumers use in their comparisons: how situational factors influence the purchase decision with factors such as time pressure and store displays, and therefore determining if a consumer is completely satisfied with a product and is willing to share the experience but most importantly repeat the purchase, generating Brand loyalty (Solomon, 2013).
The study of consumer behaviour not only focuses on the process of consumption and buying behaviours, but it also researches on the decision making process that impacts the power of the consumer and in addition facilitates or refutes it (Ratnakumari & Kumar, 2017). Also, Sekhar, Srinivas, and Prasad (2016) noted how consumers’ purchases were divided, since not 100% of the time the decision was regarding their needs but the needs of a third party. So, consumers were divided in two categories: individual and organisational. Where individual consumers are being the ones who merely intend to satisfy their current wants and needs by purchasing products or services for themselves and on the opposite organisational customers aim to satisfy the needs of a third party (Sekhar, Srinivas, and Prasad, 2016). Moreover, since individual consumers come from different backgrounds regarding age, culture, lifestyle, etc., it is posted and explored that the buying power of a consumer is highly influenced by various psychological, social and cultural factors (Kotler and Amstrong, 2010).
Blackwell et al. (R. Blackwell, D’Souza, Taghian, Miniard, & Engel, 2006, p. 76) have extensively mapped what is known as the Consumer Decision Process Model (see apendix XX). This model has mainly 5 stages. Firstly, the person recognises the need, then the consumer is embedded in an intensive search for alternatives as well as an evaluation of those alternatives. On the next stage, the consumer makes the purchase followed by the consumption of the good or the service and, finally, the post purchase evaluation comes, ending the process. According to Blackwell et al., such stages are influenced by individual and environmental factors. This specific model is an essential process that most researchers use to follow and investigate consumer behaviour. It also presents plenty of limitations due to the fact that not all people follow all five steps to consume a product. There are plenty of stages that are being skipped regarding the context of the product and also the consumer (Kotler et al. 2009).
On top of that, there is also word of mouth. Consumers normally reject advertising messages because they perceive them more as a sales tool than an actual source of information and guidance on what the product/service is about (Church and Moore, 2013). WOM (word of mouth) is one of the most powerful marketing communications since it can flow through large networks of relationships (Frenzen and Nakamoto, 1993). Thanks to social media and the internet, WOM is no longer focused on “person to person” interaction but rather on communication between communities with large amounts of people talking and reviewing different products and services. Therefore, we can define WOM as an act of exchanging marketing information among customers and plays an important part in changing and shaping consumers’ attitudes, behaviours and beliefs towards a brand (Katz and Lazarsfeld, 1955). Since WOM is delivered by someone trustworthy in the eyes of the customer, it generates a more persuasive influence (Feick and Price 1987). This communication can either be positive or negative and it can occur on a wide range of online channels as well as physical ones (Henning-Thurau et al., 2004).
Hennig-Thurau et al. (2004) defined eWOM as ‘any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet’ (p. 39). eWOM occurs on a wide range of online channels as physical channels.
The research on consumer behaviour not only helps marketers have a better understanding of consumers’ thoughts, feelings, reasons, desires and decisions but also encourages the whole organization to plan up front. As a result, limited information on consumer behaviour may result in bad decision-making and potentially in not reaching the company´s goals.
Nowadays, all of theses theories and strategies have gone obsolete, they are failing to capture all the “touch points” in the consumer behaviour journey. Now important buying factors because of an extensive variety and digital channels together with the well-informed client, a more sophisticated and flexible approach needs to be created to survive in this sea of products and services. Thus, consumers are influenced by online channels throughout the decision-making process.
2.2 Internet and online shopping
The initial chapter approached our knowledge on consumer behaviour and the decision-making process, it also develops our understanding on how nowadays the internet can easily influence those. The present chapter will introduce the characteristics of how consumers can switch and change attitudes when they are shopping online hence impacting consumer behaviour.
It is clear how the internet has impacted our lives. Currently, there is a large number of consumers engaging in online commerce, generating a rapid expansion. The internet is giving companies the ability to offer their products or services through not only traditional channels but also virtual ones.
Since consumers are now engaging in online shopping the relationship between customer and brand has turned 180 degreesand can successfully exist in online environments and value can be created and delivered in more varied ways than before. The opportunity to be available at all times, thanks to the internet has provided companies and customers to have a greater interaction and individualization (Kassim and Abdullah, 2010).
Online domains vs. real ones can be aggressively different in nature, one is virtual the other is real; size wise, one is small (limited) vs. the other one that is large and can be infinite and, most importantly, sensory representation, one only uses two senses while physical environment uses four, consequently, offline concepts and theories from the offline world are not all relevant and sufficient (Demangeot and Broderick, 2007).
Shopping is an activity that can be approached with certain groups of particular motivations (Tauber, 1972) that more than often go beyond, and overpass, the purely acquisition of products and services, it may include the acquisition of information, search for escapism, even fantasy or more often fun (Holbrook and Hirschman, 1982).
According to the GE Capital Retail Bank research, consumers use digital tools whenever a big purchase approaches, using mobile devices, search engines and keywords to look through (CSA STAFF, 2018). Even though there is a clear growth in online retail and purchases, 88% of the population surveyed still made their final purchase in store after they used online tools as a search mechanism (ibid), exemplifying how consumers use the internet to find information on their purchase, allowing them to look through data and compare it, assuming that by using that methodology they will increase their chances of gaining additional value.
The detailed information that electronic tools can trace and store about consumers’ usage and e-commerce transactions (normally known as “clickstream data”) presents marketers with the incredible opportunity to have a clearer understanding and prediction of consumer behaviour (Bucklin et al., 2002). Complementing that “Internet choice behaviour is dynamic and consists of an evolving series of interrelated choices, where both consumer and marketer can play a role in shaping the context of subsequent choice events depending upon the outcome of earlier encounters”.
So, consumer behaviour in an online environment is greatly affected not only by general buying factors but also the interactions that the consumer has with the internet domain. Consumers nowadays have become more and more demanding, they want to capitalize on all the value they can, they want to be 100% sure the product they are acquiring is quality. And how can they confirm that? From social media to mobile devices, modern and new technology has given back the power to the consumer to compare products, research on better prices and, additionally, compare the best deals possible Edelman and Singer 2015). Hence, the internet has an enormous impact on the decision-making process in the consumer’s road to purchase. Latest statistic trends show that 90% of consumers read online reviews and 88% trust them (Saleh, 2018).
Other supporting systems called “cookies” helped customers during the search process. Using them, the internet is able to suggest, basing this suggestion on the history of your search, useful products or potential websites to decrease the time spent on external search. Cookies therefore help the customer in the overwhelming task of finding the right product at the right price in a sea full of massively good and bad choices, where frustration can overpower (Schafer, Konstan and Riedl, 2001).
Even though online commerce gives the customers plenty reason to shop online, there are still some reasons for why a large number of them are not convinced. Reasons such as risks, for example unsecure payments, undelivered products, spam and viruses, large amount of unwanted emails and marketing publicity, among others (Wang and Katawetawaras, 2011).
The internet is without a doubt the perfect tool for interacting with your customers. Even though they are changing fast and sometimes companies cannot react, it is still the fastest growing market in years according to the Direct Marketing Association, so digital channels matter profoundly since also great part of the decision- making is processed online. It is a low-cost tool that allows organizations to be efficient, fast and predict future needs (Kotler and Amstrong, 2008).
So, the internet is a tool used by customers to search for information regarding a purchase and the consumer is positively influenced by the trustworthiness of the design of the website or application.
2.3 Brand loyalty (e-loyalty)
We live in a world were choices are unlimited, at any time, in any place. The internet and later on e-commerce has made that possible, and they have given us, the consumers, a large set of possibilities, making brand loyalty a hard task to achieve in brands nowadays. Since from a seller´s perspective achieving brand loyalty is been recognized as a key path to reach profitability (Srinivasan, Anderson and Ponnavolu, 2002), companies need to act accordingly to enhance brand loyalty.
First of all, let us explain the current theories regarding brand loyalty to better understand how brands can build it. Online retailers need to take a deeper look into their customer and fully understand the antecedents of e-loyalty, in other words, loyalty to a business that sells online products or services (Srinivasan, Anderson and Ponnavolu, 2002). Initially brand loyalty was all about the repeated behaviour, and how the consumer will go back to the same brand. Authors like Browm (1952), classified the loyalty based on the patterns the consumer would follow. Later on, Lipstein (1959) defined brand loyalty by how probable it is to repeat the purchase over time. But these theories would end up vague and full of limitations, since it would not differentiate true loyalty vs. limited options to choose from (Jacoby and Chestnut, 1978).
To better understand brand loyalty, researchers proposed to measure it on two separate dimensions, the first one, based on past researched and mentioned above is the behavioural dimension (Severi and Choon, 2013; Taşkın et al, 2016). The second, dimension added was the attitudinal dimension (ibid). Where several authors got the chance to define brand loyalty, for example, Jacoby (1971) expressed how brand loyalty was a result of a biased behavioural process that was influenced by psychological process. Gremler (1995) also suggested the double dimension stating that behavioural and attitudinal dimensions need to be taken in consideration when measuring brand loyalty.
We all know what a behavioural dimension is (repeat purchase), but what does attitudinal dimension stands for? According to Kassin and Abdullah (2010), a consumer will have a positive attitude towards a brand whenever they believe that brand has desirable attributes, therefore, favourable attitudes. In addition, they mention in their study how attitudinal loyalty consumers are much less impacted on negative information about the brand in reference and remain loyal throughout time (Donio, Massari and PassianteDabho, 2006).
On other perspectives, Wanke and Friese (2005) state in their research how experience is a crucial factor in brand loyalty. For instance, in the case of a simpler product or an unknown product, people will take in consideration their past experience so they can short the process. Further studies have come to a conclusion and have acknowledged hedonic attributes and attitudes can affect brand loyalty and buying behaviour (Liao, 2015). Consequently, it can be inferred that for people to be loyal to a specific brand in their decision-making process, there are plenty of factors that are going to influence the final behaviour (Winder, 2017).
In online environments, on the other hand, brand loyalty can become complex to achieve. Not only does the consumer have plenty of options a click away but also there is always a perceived risk by the general public. To make sure consumers commit to a long-term relationship with your brand, hence a single on-line provider, companies will look to go past beyond simple satisfaction, mainly developing trust to reduce the risk of using an online service (Ranaweera and Prabhu, 2003). Several researchers have found a set of factors such as brand name (Huang, Schrank and Dubinsky, 2004) or brand knowledge (Chen and Hen, 2003), even brand familiarity, can influence the perceived risk some consumers see in an e-retailer´s website or app for online shopping and buying. Therefore, if the e-retailer has a strong name and is perceived as a strong brand, this will mitigate the risk consumers feel when buying online (Kwon and Lennon, 2009). In addition, the purchase can also be influenced by website design (ibid) and product presentation (e.g., use of motion) (Park et al., 2005), can reduce or increase perceived risk among customers (ibid).
Customer loyalty is a challenging and a critical strategy that marketers use to gain a competitive advantage (Kwon and Lennon, 2009). Earning and maintaining it throughout time in the internet environment where the cost of switching is basically none or extremely low, an e retailer faces competition that is only a click away (ibid). That is why customer loyalty is important, loyal customers will not only repurchase but also will provide positive word of mouth and pay a higher premium price as a result (Kandampully and Suhartanto, 2003).
In conclusion, in order to gain the loyalty of your consumers it is important to understand their behaviour and attitudes. Why they make a purchase, how, in what space and most importantly what their preferences are. So, for the purpose of the study, we are defining e-loyalty as a consumer preference attitude for an e-commerce that consequently turns into a repeated purchasing behaviour. Understanding consumer behaviour in an online environment can lead to success, but in order to do so, there are tools and mechanism of search that are being used to generate data and engage closer with the consumer. So, e-loyalty is positively influenced by brand familiarity and knowledge.
2.4 Market research and industry analysis tools
In order to understand our consumers and plan a marketing strategy the very first step a company needs to do is comprehend the internal and external environment. Just as Jobber and Ellis-Chadwick (2013) state in their study, the marketing environment influences the behaviour of any customer and often it leads to changes in what they were expected to buy.
Normally, when planning a marketing strategy, a macro analysis is made. Thanks to the contribution of Francis J. Aguilar (1967) in his book “Scanning the Business Environment” he created the path and the main factors that companies need to consider when analysing their customers. It is well known as PEST analysis (political, economic, environmental, sociocultural and technological), but in time it has transformed into PESTEL adding now environmental and ecological factors.
The next step most marketers would take is have a thorough micro environmental analysis, in most cases using Porter´s (1979) model where he classifies the main five competitive forces in a market. There are plenty discussions whether this model is still helpful at all, but companies still develop their strategies surrounding the model despite the judgements, since it is one of the main methods used in the industry and it explains how there are different factors that may affect not only the brand but also the company (new entrants, suppliers, substitutes, competitors and customers).
Next step after the segmentation of the targeted market, marketers must manage marketing information. Customers insights must be well mapped, information on customers such as what they value, where they buy, why are they buying, furthermore, insights such as what they would like to see in the product in the future and what features may be useful in the future. This data can be obtained with different channels such as data intelligence, market research and internal data (Kotler and Amstrong, 2011).
Some important data, internal data, such as transactions, sales rates, quality of the service and costs can be gathered easily and with no additional cost from within the company. Normally, these databases are easy to access and cheaper than others, which makes them an important source of information (Kotler and Amstronog, 2011). In addition, over the internet marketers can use a wide set of assortments as cues such as colours, images and sounds to not only attract but also influence consumers (McGaughey and Mason, 1998)
Recently, with the revolution of new technologies, especially information technologies, companies have the chance to gather great quantities of data. Using e-mails, SMS, blogging, social media and other digital channels people are now creating great amount of usable marketing information. But the main issue is still quantity does not equal quality, which is what marketers need to make decisions on (Kotler and Amstrong, 2011).
Other companies use the market research tool, through surveys, focus groups and interviews they gather relevant information on their consumers. This particular method could be expensive and may not reflect reality as close as the internet, just because consumer behaviour is rapidly changing and the only way of being updated at all time is using going straight to the source at the actual moment, the best way to do that is using the internet.
So, as mentioned above, the internet has become the perfect tool for the complete process of creating usable and valuable data. Additionally, it is the perfect channel for sales, promotion and distribution of products and services in a low budget, being the perfect marketing instrument in also to commerce goods.
Online data provides much more info than the methods explained before. It can give you the entire trajectory of a person through the brands website, even if the visit did not turn out to be a buy, you can still monitor their paths. According to Bucklin et al. (2002), the detail that the internet provides on how customers use the e-commerce presents a great opportunity for empirical modellers to improve their understanding and prediction of how people choose.
Ernst and Young (2014) explain how every interaction a customer does online they leave valuable insights on their behaviours, personal preferences and small hints on what they are about to buy. Translating big data into a real-time delivery of insight may enhance profit, reduce risk and relate even more with consumers, bringing productivity and, therefore, increasing shareholder value, which is the central goal of analytics (ibid). Nowadays, decision makers want to know where things are heading, so in order to predict future customers’ needs, techniques from data statistics, modelling and even artificial intelligence are being used to analyse data and therefore predict the future (Lane, 2014)
Even with Big Data there are still organizations that are not seeing the whole picture, who their customers are and why they are buying their products. Companies need to understand and pursue insights in order to create efficient strategies and operation decisions. In a business world that is constantly and rapidly changing, future predictions are more important than simple historical data or current theories (Ernst and Young, 2014). The internet and Big Data are used as a tool to predict consumer behaviour thus, enhancing e-loyalty.
3. Research Methodology
In order to achieve the objectives of the study and answer the research question (mentioned in section 1), a qualitative approach is going to be used. In section 2 of this dissertation/study, a literature review is presented as an introduction of the thesis subject. Next, primary data was gathered in order to prove what was in fact stated in the above chapter. In other words, how to understand consumers’ behaviour while they shop online, using internet and technologies as tools to predict trends and enhance brand loyalty. In order to accomplish what is mentioned before there are indeed some perceived behaviours that need to be evaluated. Many researchers choose to use subjective criteria in order to use interpretation in their study (Saunders et al., 2009), and that is the the central aim of the analysis. A qualitative methodology opens up a complex setting and leaves interpretation perspective to come across the study and helps in having a continuous analysis (Bryman and Bell, 2011).
3.1 Research approach
For this particular study semi structured in-depth interviews were chosen as the main approach, with open-ended questions, which normally allows the thoughts and behaviours of the interviewee to be expressed in a natural way and with more details; it also encourages greater communication between the respondent and the interviewer (Noel, 2009). Semi structured interviews are particularly known as the ones where the researcher has a number of questions but normally does not follow the order primarily in mind, so respondents are free to speak their mind and add new points of view if they consider it relevant (Bryman and Bell, 2011). Using the face-to-face methodology in the interviews the researcher can gather attitudes and behaviours, reactions and feelings that through surveys you normally cannot, and with that, detecting opportunities (Quinlan, 2011).
Qualitative research is characterized by a specific form of inquiry that analyses data and information given through language and behaviours in a natural environment (Lincoln and Guba, 1985), since this study is based on consumer behaviour, the methodology approached chosen is the most accurate one to gain answers to what is being pursued in the study. In addition to the interest in understanding the informants not only answer to the question but also offer his/her point of view in a broader sense, conveying their reactions throughout the whole of the interview.
An interview is a conversation between two persons that have a particular purpose. The interviewee responds to the questions the interviewer makes regarding a research question or an objective (Saunders, Lewis and Thornhill, 2012). As mentioned above, there are different types of interviews and the difference will rely on the structure of the questionnaire used.
For this particular research, 7 semi-structured interviews to consumers on how and why they shop through the internet when they are doing their groceries. The major aim in this particular methodology is for neutral interviewers to gain a large amount of comparable information from a potential number of subjects (Edwards and Holland, 2013). Moreover, in an exploratory research, engaging with an expert on the field in an interview is highly recommended, to gain insights in professional actions taken, a person with important experience and knowledge in a similar subject (Flick, 2006).
To be able to achieve the purpose of the study, how the internet is used as a tool to predict consumer behaviour and generate brand loyalty, a multi-method qualitative research is going to be used (Morse, 2003). Data will be collected with an interview with an expert on the field, and several interviews will be collected as well to gain information regarding consumers. Through the analysis of information and data from both the consumer and the industry, a wider perspective may be approached, and findings could be more relevant and therefore be compared. This qualitative approach allows the researcher to gain a richer and more in-depth understanding of the subject in matter, and with the help of the analysis anticipated and unanticipated subjects make surface (Rahman,2017).
When conducting a research, the accuracy of what is found depends greatly on how you select your sample (Kumar, 2011). In spite of the issue that when using a sample, a minor group of the population is chosen, when a researcher chooses it properly, it can contain representative information in a large scale (Kumar, 2011). When a research is conducted, the researcher may use probability or non-probability sampling. The difference between probability sampling and non-probability sampling is the fact that in probability samples the population selected is random and every person has the exact same chance of getting chosen, and in the non-probability samples, individuals do not have the same chance to be chosen and are rather chosen by the researcher´s convenience (Bryman and Bell, 2009). To conduct this research, the individuals were chosen by judgement and in-depth interviews and observations where made.
When choosing the participants for the consumers’ interviews, they were selected based on the specific characteristics of doing their grocery shopping online at least once a month, or on a regular basis. This means that when asking them questions on how they behave while shopping on a website, they were comfortable answering those questions and sometimes the answers came naturally, which gave a perfect flow to the interview. When the interview was completed, the researcher talked about the purpose of the study and ensured the participant with the respective consent form and full information on the study he/she was participating in. Regarding the participant of the expert in-depth interview, he was chosen by his knowledge on new and current tools in the market and a person considered an expert on the field of study. Moreover, a later comparison is made on how consumers behave and how companies use those behaviours and actions to their advantage, of course, through online channels.
When sampling a factor was considered, out of 7 interviews to consumers, 5 of them were made to women, since it is still considered the majority of British women as the responsible for the cooking and food shopping in the household (The Guardian, 2014). The individuals all live in London and are currently in charge of that activity in the household.
3.1.3 Limitations of method used
When conducting the current study, there were some limitations encountered by the researcher. There was a difficulty in gaining participants for the interviews, numerous individuals do not do their grocery shopping online too often and the main research approach was gaining information on how people behave in online environments. Regarding analysing the data interviews are simpler to analyse but time-consuming to perform in terms of conducting them (Noel, 2009). In consequence, because the study is based on a subjective approach (qualitative), participant and observer´s biases should be taken into consideration (Robson, 2002). In addition, it must take into consideration the small size of the sample, therefore results may not be generalized.
In this section, the findings will be analysed. The collection of data was done to gain knowledge on how consumers behave when doing their groceries online. Through in- depth interviews with both consumers and an expert on the field, valuable information was gathered which will be examined and analysed to understand better how consumers make their purchase choices, and hopefully identify what influences their decisions in an online environment.
4.1 Data Analysis
All seven interviews to consumers and the interview to the expert where transcribed and recorded (4.25 hours in total) and the verbatim transcripts where 21 pages long. To get a better view of the data, a systematic and detailed interpretation was made with the process of content analysis used by Berg and Lune (2012), which follows the same process as Krueger and Casey´s (2000). The first step into the analysis of the data is to code it, using the raw information, the transcripts will be categorized in different codes. Each code will address the objectives of the study and, in fact, prove the hypothesis made beforehand. Each code in the study will be as important and will try and explain the aims and objectives of the present study.
The codes used have been chosen according to the literature review. And are in fact ensured by theoretical and empirical background of the same phrasing and elements previous authors have used. The first code that will be analysed is consumer behaviour in an online environment, such as EWOM (Henning-Thurau et al., 2004) and how attitudes change when they have the possibility to compare different situations and outcomes (Solomon, 2013). The second code will gather information on internet and online shopping. How engaging with the internet can become not only a purchase but also a search for information. The third code, will be based on how the consumer is influenced by the trustworthiness of the website and brand. The fourth code will encounter the influence on familiarity and knowledge about the brand on how loyal the consumers are to their website, in other words, e-loyalty. Finally, the fifth code will attack how the internet can be used as a tool to better understand the consumer and bring brand loyalty into the brand.
4.2 Consumer behaviour: how online channels influence consumers
According to Belch and Belach (1998), it is important to understand your consumers´ attitudes and behaviours and how different factors can influence their actions. On the interviews made to consumers and how they shop their groceries through the internet, a factor mentioned repeatedly was time convenience. Phrases like “Well, it definitely saves time”, “I mainly chose to buy online because of the time convenience and offers” or “Most of the time I rather shop online because of delivery time”, stating how the online channel is better for people in order to save time and perform other activities that they rather do. A common factor found in several interviews was how they will be inclined to use online channel whenever they were buying a great amount of things, mentioning the lack of a car to carry the full pack of groceries: “If I need to get a lot of groceries, I will opt to get an online delivery (I don’t have a car)” or “As I don’t have a car, the delivery is useful”, indicating delivery as an important factor to do their grocery shopping online.
According to Solomon (2013) situational factors may influence the purchase decision and later on if satisfy will determine the fact that they will repeat the purchase or share the experience. A recurrent factor in the interviews on why they chose the online channel were situational factors, such as no time, easy access and time issues, stating that they could perform the activity while they were at work or in their house, instead of wasting time by going to the store and then walking with big bags all the way back home, “Because I can do it while I am at work” or “I guess whenever I decide if I want to do it online or not, I just think of the things that I will be not doing in that time.”
A clear difference in the decision-making process was found between men and women who where interviewed. For men, when choosing a brand to buy their groceries, their decision-making processes were clearly shorter ones; they went with previous experience and stated that for food and drinks they did not make a lot of effort in finding reviews or comments on the internet “No, don’t care enough for food and drink” or “Same site all the time, Ocado or Amazon”. However, for women the process was different, the most important thing was price vs. quality, stating that they would repeat the purchase if the food that arrived got good quality. Saying for example, “I love cooking so for me it’s really important that the quality is on point”, or “I am so picky and insecure about the online purchasing so it has to be a trustworthy brand. So I can also definitely say that it has to be a well-known brand for me. Like I really trust Tesco and Waitrose that’s why I am so confident ordering online but if it was Liedl, I wouldn’t purchase online probably because I also know that their products are not that good” Those particular individuals had a main influential factor when choosing from which brand to purchase.
When asking the consumers why they choose that brand, most of them answered on past experience situations, however, some of them mentioned they used a brand in particular because of WOM, a friend or a colleague who recommended it so they went for it as stated by Frenzen and Nakamoto (1993), proving that still word of mouth is important to people and reviews matter in the online word, “If I am paying attention to the online reviews, I would definitely care about my friend´s recommendation”. In addition, delivery time slots and price were mentioned as factors that influenced why or why not they used an online channel and brand, stating that if the hours were tricky or additional charges where made then they would not use that specific brand “Delivery time, flexibility of delivery slots i.e., I don’t buy from companies which do not offer me a max 1-hour window delivery within 4 hours of order…” or “Delivery charges can also influence me, as if I have to pay £5 for a delivery slot, I probably won’t bother”.
Findings explain how now, because of the availability of online channels, consumers have become more aware of things, and are demanding more value for less price. Factors such as time and situation can affect their behaviour, and bringing a good service in less time is more important for them than before.
4.3 Internet and online shopping used as a tool to research information
It is, without a doubt, clear how the internet has changed our lives. The opportunity to find available at all times products and services have provided not only customers with a great overall experience but also companies to create interaction even in times of the day they past times were impossible (Kassin and Abdullah, 2010). That is why most consumers´ interviewed highlighted and emphasized time in their interviews, being saving time the absolute winner in choosing and online channel “Well, it’s much easier and fast. I avoid going there, waiting in the queue, bringing the groceries back home…” and “I mainly chose to buy online because of the time convenience and offers”, these are some of the examples of customers stating how important time saving is in their day to day activities and how online channels can make their life easier, specially in times where life demands you to do things at all times (sports, work, personal life, etc.).
Edelman and Singer (2015) stated how important it was for the customer to use internet channels to research on the brand and the product, comparing prices and deals with the help of social media, mobile devices and even search engines. Also, it is strange that reviews are overpassed, the information is currently available at all times and in different ways that customers are willing to engage with them. “Yes, it’s pretty rare now that I would just go and buy something without reading up on products and what their reviews are like. It’s so easy to find things on the bigger online shops and they all have good review sections, so I would be silly to not check before I buy!”, this particular interviewee told the researcher how whenever he buys any product online, reading reviews is something that comes naturally to him and would be even “silly” to not consider those as recommendations and reference for his decision-making process. Just as latest statistic trends reveal that 90% of consumers that buy through the internet read online reviews and 88% of them trust them (Saleh, 2018). “Online reviews help me decide if I want to buy the product. I trust them because they come from actual consumers like me, so they are very helpful”. The fact that behind those reviews a normal customer relies is even more appealing to customers, makes them more trustworthy in their eyes.
Even though internet and online shopping can be represented as something simple, helpful, easy and time saving, there are perceived risks by the customers that may encourage them into opting for offline channels (Wang and Katawetawaras, 2011). Unsecure payments, undelivered products, spam and viruses can make the consumer think twice about buying through the internet. In addition, how the website is designed and how familiar is the brand can also influence the perceptions of the client and therefore influence whether they choose virtual channels or offline ones. “I think that brand colours, logos and image should be consistent everywhere on the website. Also, product images should be of good quality. There should be no typographic errors or things like this. The website architecture should be clear, organised, easy-to-browse”. This response exemplifies how even colours are important for online purchases. Other example “If a website is poorly designed/setup I don’t trust them as much as a company that has spent time to make sure their website looks good.
Since the internet is a low-cost tool that allows organizations to be efficient, fast and predict future needs (Kotler and Amstrong, 2008), they must get it right, so customers will feel safe using it so trend and customers´ paths could be followed, hence generating valuable data.
4.4 Brand Loyalty in e-commerce: the influence of brand familiarity and knowledge
One of the main concepts of brand loyalty is the action of repeating the purchase through time, but how would a customer be encouraged to do that: according to Wanke and Friese (2005), in their study they mentioned experience as a crucial factor in brand loyalty. Consumers interviewed in fact mentioned, specifically in grocery shopping, how they would repeat the purchase if they thought the experience went well. Most of them would argue on how smooth the website was, and how easy it was to scroll through the products saying “I would try new ones but right now it’s so much easier for me to stick with my past experience. So I can definitely describe myself as a loyal customer.” Or others made a more in depth analysis on their experience stating “Amazon: kicks ass, Deliveroo: good price for fast delivery and Ocado: “Bad design but has partnerships with my life insurer giving good prices”
Recent theories express the necessity of a brand to have specific attributes in order to create brand loyalty among its consumers (Liao, 2015). Such attributes may be exclusivity; this particular customer liked an organic grocery website because she was able to find unique and exclusive products stating “So I have never heard of that one before but my friend tried it and she said it was really good, it had really amazing brands, which are kinda exclusive. So I am definitely gonna purchase from there, it’s on my mind”.
Findings in brand loyalty theories and in this literature review also showed that a strong and familiar brand name may infer in a decision making process, so if a brand is perceived by the public as well-known prestige and strong consumers will feel safe and comfortable to shop in their website (Kwon and Lennon, 2009). Likewise, the customers that went through the interview process state that if the brand was well-known, they would in fact repeat the purchase and definitely share the experience: “I would buy more from a website I am familiar with, because it would be easier for me, I already know how the website works and everything, plus I trust the brand if I have used it before…” and “When I buy something I like from a well-known brand, I probably buy it again…”
Another factor mentioned in theories about brand loyalty that were also found in the interviews performed is how website design and product presentation can impact whether a person would be loyal to a brand (Park et al., 2005), a well-designed website can be perceived as a low risk one and encourage more people to engage repeatedly. Comments such as “The design and experience is really important…” or even, “If a website is poorly designed/setup I don’t trust them as much as a company that has spent time to make sure their website looks good”
An important attribute of a brand that most of the people interviewed acknowledge as helpful was how loyalty benefits will increase their chances of repeating the purchase. When asked, those benefits where well received by the customers and most of them found it persuading into going back to the website but, they had to be easy to collect or used with comments such as “It depends how easy it is to collect the points etc. I use ASOS a lot and because it is all online, they give loyalty points automatically and email me when I have enough to use on vouchers etc.” or “I check every discount code and always carry my loyalty cards with me.”
4.5 The internet and Big Data are used as a tool to predict consumer behaviour thus, enhancing e-loyalty.
To found out more about how marketing tools are currently being used in organisations and by marketers an interview with an expert (Commercial Brand manager of Craft Clubs) was conducted. Please refer to appendix XXX to see the transcript of it.
Since the marketing environment influence the behaviour of consumers and leads to change in their actions, as Ellis-Chardwick (2013) posted, companies need to be updated on what are the new environments consumes´ are impacted on, one of them is the internet. According to the expert interviewed consumers´ path to complete a purchase has changed dramatically, “…CRM systems have evolved and payments security has gone up to prevent fraud…”. Companies now are investing in technology, hiring more skilled people and implementing special areas of the business to gather insights on consumer behaviour through new technological tools. “… by increasing the size of the team from 9 to 15 in only one year…”.
According to Craft Club commercial manager, researching your consumer is a highly recommended approach before creating or engaging in a campaign. They use tools such as “Survey Monkey, we send surveys every month to understand consumer needs, feedback and listen to their comments…”, they also run “…competitions online, to understand which consumers are engaging the most with the business…”, another great tool is mailchimp, to analyse how the emails being sent perform (open, click through, deleted, among others), they use analytics to “… analyse our club member´s behaviour in terms of how they interact with our website (minutes spend in the web, number of page views, bounce rate, etc)…” and finally evernote, to track all the content that been generated by their club members. Proving how important is to not only have one tool but to integrate different ones to generate a 360 integration on how your consumers like to communicate.
Nowadays companies are on the look for new trends, they want to be the first ones to know new attitudes and perceptions of their customers, information such as feedback from products, “…how much time they spend in our blog, how much time they watch our videos, how long they last in the path to purchase, what´s their omni channel behaviour…”, Craft clubs commercial manager said, that is what they look for. With the help of google analytics, facebook insights, ads campaign manager, mailshimp, technological tools they are on top of what’s happening under their eyes.
For companies’ loyalty programs are not only a good way to maintain their customers in house but also for them to gain valuable knowledge on them. According to Craft Club commercial manager, an e-commerce platform, “…you can clearly analyse the difference in behaviour of someone when there was no loyalty programme and then when there is a loyalty scheme…”. You can get a broader look at how good are your promotions getting across people and how attached are they.
On a conclusion sense internet can be and ultimate end-to-end tool to understand consumers and create brand loyalty. With different tools “…you can automate things and you can interconnect different programmes so they are related and work together by providing different kinds of information and stats so they are analysed afterwards…” was stated by the expert interview. Therefore, that way giving consumer exactly what they want at the moment they want, hence generating brand loyalty.
5. Conclusions and Recommendations
The final chapter will connect together what was found in the the study plus what was gathered in the literature review to answer the the research question presented in chapter one of this master´s dissertation. It will analyse in depth which objective and goals were met. In addition, it will explain the study limitations and future research recommendations that may be develop in the subject in discussion.
The main purpose of this study was to research on how consumers make decision and behave when engaging in online channels and look for modern ways for company to collect those insights through technologies and predict future trends thus enhancing brand loyalty. The research question implied how the internet could be used as a tool to gain important data on customers and therefore have a wider look on what are the next steps to increase brand loyalty. Is this widely amount of information useful for companies to generate strategies? Is it being used correctly and which ones are the most popular ways for companies to research on their market?
As discussed on chapter 2, the literature review, most theories, the last 50 years’ worth of analysis, don’t consider the new factors when grafting how consumers behave or how a consumer reaches a decision when shopping. Many of a person´s day to day decisions are based on emotions or impulsive actions rather than a lineal path. Those specific behaviours are extremely difficult to find and therefore difficult to track, so previous models become inappropriate.
Moreover, and thanks to the investigation conducted, consumers are constantly looking for easier ways to perform their day to day activities. They are expecting an overall experience and are demanding a more personal communication when approaching brands. The constant look for value in their life has made them more demanding, thinking twice before purchasing and evaluating all the options they have available through online tools that can follow their steps through the online channel. Now details seem to be more important in addition to time, whenever customers feel that their time is being wasted then negative perceptions of the brand will take over consumers’ thoughts and consequently drive away brand loyalty.
Going back to how companies can use internet and online channels to predict consumer information and therefore enhance brand loyalty, is that possible? the answer is yes. Traditional market research tools such as surveys or focus groups may deliver important information on how consumers feel and think about the brand for example levels of satisfaction, but will be difficult to provide feedback on how they act or will act in the future. Since now e-commerce is spreading rapidly, and consumers are engaging more and more in online shopping, e-retailers need to step up their game and use that also as a tool to gather valuable information on how their customers behave in that environment.
By having a complete understanding of how consumers behave and what are their preferences, organizations can in fact separate them into groups and deliver only personalized information and improves their overall shopping experience. By sending relevant information to them, marketers can direct customize goods to people that are looking for them, as well as communications. Internet is a massive tool to complement what can be gathered without it and therefore it is without a doubt a tool most organisations have to manage. As the internet gets bigger and bigger companies´ need to embrace it and adjust their structure to it, investing in new software and technologies as well as people with skills on using them.
But, as good as it can be, companies can not depend only in online channels, since it is still not the majority of the population, organisations should still do external and internal research and gather as much information as possible to make better and better decisions everyday. One important tool that is recommended is observation. Actions that are not register through online channels can be missed.
Finally, one last recommendation is for organisation to dig into the future, do not get stuck on past behaviours and keep analysing past results, through team work constant research on customer insights, understand it and with common sense and creativity try to predict future needs. They must always question things and be critical.
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