chapter 5.pdf
- 2. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-2 CHAPTER 5 OBJECTIVES After reading Chapter 5 you will be able to: Discuss general statistics about the Internet population. Describe the Internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process. Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange. Highlight the four main categories of outcomes that consumers seek from online exchanges.
- 3. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-3 THE CUSTOMER’S STORY A typical one-hour adventure in the life of a 25-year-old professional, Justin: Tunes his iPod to the latest Diggnation podcast while his TV is tuned to a soccer game and his smartphone and tablet are within reach. Picks up his computer / tablet to find a blog mentioned during the podcast, sees a video on the blog , transmit it on his TV set and texts a friend about the video.
- 4. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-4 THE CUSTOMER’S STORY, CONT. Justin searches for the video title on Google and finds a job posting on Vimeo, an online video-posting site. He posts a link to the video and Vimeo site to his Twitter stream. Justin is the new consumer: a multitasker attending to different media simultaneously. How can a marketer capture dollars from advertising online, selling music downloads, charging fees for social media subscriptions?
- 5. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-5 CONSUMERS IN THE 21ST CENTURY, CONT. In 2011, 2.3 billion people had access to the Internet, 32.7% of the global population. Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the Internet.
- 6. CONSUMER SHOPPING BEHAVIOR ONLINE http://ww w.youtub e.com/wa tch?v=qR KCOLbxVs Y 7-6
- 7. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-7 Many consumer behavior principles that describe offline buyer behavior also apply to online behavior. 1. Buying process steps: need identification information search alternative evaluation purchase and post-purchase activities 2. Hierarchy of Effects model 3. AIDA model: attention, interest, desire, and action 4. Word of mouth (WOM) CONSUMER BEHAVIOR ONLINE
- 8. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-8 The table will explains some consumer behavior theories for online buyer behavior. Scarcity Popularity Affinity Authority Consistency Reciprocity CONSUMER BEHAVIOR ONLINE, CONT.
- 9. SOCIAL PSYCHOLOGY OF SOCIAL SHOPPING ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-9
- 10. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-10 Exchange is a basic marketing concept. It refers to the act of obtaining a desired object from someone by offering something in return. Exchange occurs within the following contexts: Technological Social/cultural Legal The exchange is often motivated by marketing stimuli. THE INTERNET EXCHANGE PROCESS Describe the Internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process.
- 11. THE ONLINE EXCHANGE PROCESS ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-11
- 12. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-12 TECHNOLOGICAL CONTEXT The focus is upon two important developments affecting online consumer behavior: Home connection speeds The changing landscape of digital – content receiving devices (e.g. smartphones) Web 2.0 technologies
- 13. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-13 TECHNOLOGICAL CONTEXT, CONT. Home connection speeds 66-77% of online Americans connect to the internet at home with broadband. Broadband users enjoy more multimedia games, music, and entertainment because they download quickly. Customers access from handheld devices (e.g. smartphones…) tend to access Facebook, news, weather, stock quotes, and other low graphic data services
- 14. TECHNOLOGICAL CONTEXT, CONT. Receiving devices The typical U.S. home has 26 different electronic devices for media and communication. Streaming music, TV and video growing Web 2.0 Technologies Also referred to as social media (second- generation internet technologies) The key is to learn which devices an organization’s customers and prospects own and prefer to use for connecting Telematics uses GPS technology in automobiles ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-14
- 15. TELEMATICS • A communication System in an automobile that uses a global positioning system (GPS) for interactive communication • Allows drivers to receive directions and internet content or send for emergency help • It allows marketers to send information & entertainment to automobiles 7-15
- 16. SOCIAL AND CULTURAL CONTEXTS Three cornerstones for attracting customers online: Reputation Relevance Engagement Brand image and reputation are based on the market’s perception. Consumers trust each other more than advertising Consumers utilize social media channels for advice Marketers must join the conversation, learn from customers ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-16 7-16
- 17. SOCIAL AND CULTURAL CONTEXTS, CONT. Three cornerstones for attracting customers online: Reputation Relevance Engagement Consumers don’t like being interrupted with irrelevant communication. Consumers enjoy relevant communication Marketers use behavioral targeting and keyword advertising ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-17 7-17
- 18. SOCIAL AND CULTURAL CONTEXTS, CONT. Three cornerstones for attracting customers online: Reputation Relevance Engagement Marketers must provide relevant content or entertainment. Three pillars of customer engagement: content engagement media engagement engagement marketing activities ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-18 7-18
- 19. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-19 SOCIAL AND CULTURAL CONTEXTS, CONT. The following are general social/cultural trends having a huge affect on exchanges Information overload Multitasking Home & work I want what I want when I want it Online oxygen Connectivity “In the know” Self-service Privacy & data security 7-19
- 20. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-20 In spite of the Can-Spam law, the number of unsolicited emails has increased. Despite piracy laws, illegally used software abounds. When The Recording Industry Association of America (RIAA) sued illegal music file downloaders, consumer behavior changed. In 2002, 37% of online consumers shared music files, but the percentage has dropped. RIAA still claims $12.5B in annual losses from music piracy. LEGAL CONTEXT
- 21. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-21 Individual Differences: Individual characteristics affect Internet use. 1. Demographics such as age, income, education, ethnicity, and gender. 2. Attitudes toward technology. 3. Online skill and experience. 4. Social media experts 5. Goal orientation Vs. experience orientation, Online shoppers tend to be more goal- oriented. INDIVIDUAL CHARACTERISTICS & RESOURCES Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange.
- 22. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-22 CONSUMER RESOURCES Consumers perceive value as Value = Benefits - Costs These costs constitute a consumer’s resources for exchange: Monetary cost Time cost Energy and psychic costs
- 23. CONSUMER RESOURCES, CONT. MONETARY COST Enough income is needed to exchange for goods and services, and to afford a computer, smartphone, tablet & ISP for Internet access. Credit cards (but some people don’t want them or can’t get them) Debit cards Electronic checks (digital money) Smart cards (Splash plastic) PayPal (50 million customers) Innovative forms of digital money South Korea: electronic chips included in some mobiles Japan: Casio watch Spain with RFID chips implanted in the arm. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-23
- 24. CONSUMER RESOURCES, CONT. TIME COST Poverty of time is a major concern for today’s consumers. Consumers want to receive appropriate benefits for the time they spend online. Users want ease of use and efficiency The Internet helps people manage scarce time consumers are 100% involved when online ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-24
- 25. CONSUMER RESOURCES, CONT. ENERGY AND PSYCHIC COSTS Sometimes consumers feel it is Energy Costs Too much trouble to turn on the computer, log on to the Internet, and check e-mail, especially for dial-up users. Psychic Costs Web pages are too complicated Orders are dropped in the “shopping cart” Shipping prices are high Checkout process is too long or confusing Checkout requires too much personal information Site requires registration before purchase Site is unstable ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-25
- 26. INTERNET EXCHANGE The actual moment comes when exchange occurs over the Internet. Browser favorites and social bookmarks help consumers quickly jump to their favorite online retailer Bookmarks and hyperlinks in emails assist consumers in finding specific sites, information, or specials. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-26 Highlight the four main categories of outcomes that consumers seek from online exchanges.
- 27. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-27 EXCHANGE OUTCOMES There are 6 basic things that people do online: Connect Create Enjoy Learn Trade Give Each is suitable for marketing opportunity.
- 28. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade The Internet allows consumers to interact with individuals and organizations using two-way communication. E-mail, Text messages Tweets Facebook wall posts Phone calls; Skype ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-28
- 29. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade The Internet has created an ability to connect. Creation of multimedia to connect with friends, businesses and colleagues. Facebook Twitter LinkedIn Flickr ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-29
- 30. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade Give Many people use the Internet to enjoy entertainment. Audio and visual entertainment Music Movies Celebrity news Sports ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-30
- 31. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade Give Consumers can access information to learn things online News, Driving directions, Travel information, Jobs, Weather, Sports, Radio broadcasts. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-31
- 32. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade Give Transaction-oriented activities 71% of Internet users have purchased products online Users seek information before they buy Statistics for the average Internet consumer Shops online for 1 hour per day Makes 21 purchases a year 57% say the Internet has made them better consumers ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-32
- 33. EXCHANGE OUTCOMES, CONT. Connect Create Enjoy Learn Trade Give Creation of multimedia content to benefit others 86% of consumers worldwide want business to focus on society’s interests 25% made an online donation to charity in 2011 ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-33