Consumer Decision Process Concerning the Bookshop Retail Industry Online Business - Case Study Example

Title: Analyze the influences of the internal and external factors on consumer decision process concerning the online shopping behavior Name: Unit: Class: Table of Contents Table of Contents 2 The industry overview 4 Factors affecting the consumers decision making process 6 Problem recognition 6 Supply and demand 7 Opportunity cost 8 Situational influences 8 Physical surroundings 8 Social surroundings 9 Time 9 Purchase reason 9 Buyers’ mood 10 Internal influencing factors 10 Perception 10 Memory 11 Learning 11 Attitudes 13 Motivation 13 Emotion 14 External influencing factors 14 Culture 14 Social stratification, geographic and demographics 15 Reference group 16 Family and household 16 Consumer resources 17 Summary and conclusion 18 References 19 Introduction With the development of internet, bookshop retail industry online business has developed at a fast rate. The development of e-commerce has been expanding leading to more attention being required for online shopping behaviors. The online marketers have to look not only on the consumers and their products, but also in the factors that influence the customers to make the purchase decisions. Having enough information on the consumers’ behavior is vital for positioning and targeting. The consumer behavior also forms an important part in the marketing decisions. Most of the successful online marketers have achieved their success due to being more vigilant on their consumers’ behaviors and factors affecting them. The customer behavior helps the company to attain their goals. The behavior is affected by both internal and external factors though there can be influence from external sources (Vellido, Lisboa & Meehan, 2000). Online shopping behavior refers to the process used in shopping products or services online (Vellido, Lisboa & Meehan, 2000). The process of consumer behavior uses the same steps as those associated with the traditional shopping behavior. Normally, when consumers have a need for an item, they search for it online. However, in some cases, the potential consumers are attracted to the products and services they feel a need for through its information. This later leads to effecting transactions and the terms of sales are agreed. The consumer’s psychological state in making their online purchases decisions is referred to as online shopping attitude. There are several factors that affect the consumer online shopping behavior. Online shopping stores are perceived to be convenient, efficient and time saving. This is due to fact that they are open at all times and have unlimited accessibility (Aron, Irwin & Edward, 2003). This essay will analyze the influences of the internal and external factors on consumer decision process concerning the online shopping behavior. This will be achieved through analyzing the bookshop retail industry online business. The industry overview The main contributors of the growth of bookshop retail industry online business have been due to associated benefits. Internet shopping has been cited to be convenient to the consumers. The consumers are able to get all the information they need about a products online. The consumers can also be able to compare the prices before making a decision on the product. Using the internet market, the consumers can be able to utilize the products efficiently to cater for the need completely. The availability of the search engine helps the consumer to look for detailed information which leads to making the most suitable decision. The online shopping despite its advantages has been associated with several risks to the consumers. Some of the documented risks are payment safety. Internet payment has become one of the most preferred payment methods while making purchases. Though internet payment increases efficiency, they are prone to internet theft due to fact that they are virtual property. Online fraud and cyber crime have been on increase as internet security has advanced. There is also poor after sale service (Petrtyl, 2012). The internet retail industry has been one of the most successful online businesses. Most of the successful online retail industries have been taking advantage of technological advancement. There has been development of online payment methods and associated technology. The online retail market has been credited with adding comfort to life. The customers have to order at comfort of their homes. Due to the advancement in the internet, online shopping has become rampant with an increase in the number of people surfing online. Online retailing involves having a well developed business plan and good management. The main drawback with the online retailing is due to fact that the consumer cannot access the convenience offered by the traditional methods of purchase. In traditional retailing, the consumers could make judgment on the quality of product before making a purchase through seeing it physically. The customers are also denied direct after sale service. Despite this, the traditional retailings had a limited number of products and were offered at a higher cost than the online retail stores. The weakness that is associated with the online retail stores serves as the advantages of the traditional retailing. To succeed on the online retail industry, there is a need for continuous communication with the customers (Petrtyl, 2012). The companies also utilize reliable software to provide customers privacy and security. Ensuring that the customer is secure has been the main key to success in online purchases. This has been the main issue that has affected the growth of e-commerce industry. The online retail marketers are tasked with making the customers convinced that their transactions are secure and have the required privacy. The retail companies have a safe purchasing protocol where they assure their customers that their credit cards are secure when they make purchases from them. The retailers also offers convenient shopping environment where there is consistency of the products they purchase, quality and satisfaction (Lee , Cho & Lee 2002). This has been a key driver in the online retail business. The design of the company website is an important aspect of online shopping. The websites that attract the customers should be easy to use and have the necessary purchasing interfaces (O’Cass & Fenech, 2003). Online retailing involves a customer friendly interface which enables transparency in the process of making the purchases. Online retail businesses are many and diverse. The retail companies deals with different products ranging from consumables to electronics. Some of the companies deliver their products to customers’ premises at their expense while others do not offer this service. The numbers of websites which are involved in online retailing are many. This shows that online retailing have been expanding at high rate globally. The online retail business has managed to compete the traditional retailing due to the advantages associated with them. As internet penetration continues to increase globally, online shopping will continue to rise (Vellido, Lisboa & Meehan, 2000). Factors affecting the consumers decision making process Problem recognition This involves the customer becoming aware that a product or service has the capability to solve a problem or unfulfilled want. This involves acting against the risks and the uncertainty of benefits to be accrued. Problem recognition can be explained further as the gap between the state that the consumer is and the desired state. The actual state is the position that the consumer sees his or her feelings at during the moment. The desired position is what the consumer wants to feel at the time. The magnitude between the present state and the desired state affects the desire to resolve a problem. There are two types of consumer problems. These are active and inactive problems. In an active problem, the consumer is aware of it and there is just requirement of a marketer to convince the consumer on brand superiority. An inactive problem occurs when the consumer is not aware of the problem. The marketer has a task to convince the consumer that they have an existing problem which can be solved by their product. Brand superiority plays a part in convincing the consumer to make a decision (Assael, 2004). The variety seeking is the major problem that is faced by the marketers. This is due to fact that the consumer continually switches brands due to reasons that cannot be controlled by the company. The marketers are supposed to offer a lot of non sensory attributes of the products if they want to increase their brand loyalty. In order to recognize a problem accurately, variety of methods can be used. One of the methods used as intuition. This involves asking a large pool of consumer about the problems they are facing. The main problem with this method is the fact that the problem recognized may be of no importance to the consumers. Using human factor research can also help in recognizing the consumer problems. This involves looking at human capabilities in areas such as vision, fatigue and strength. This can help in identifying problems that the consumers are unaware of. The marketers can also help the consumers to identify their problems. This involves looking at what the variety of brands can help in resolving (Quester, Pettigrew & Hawkins, 2011). This is a cognitive process that leads to the selection of an action among several choices. The final output of the decision making process is an action or an opinion. The consumer decision making process refers to the process that a consumer undertakes before they make the final decision on a purchase. There are several methods in which the consumer buying behaviors can be analyzed (Vellido, Lisboa & Meehan, 2000). Supply and demand If the price of a product goes up, the demand for the same declines and conversely, if the price goes down, there is rise on demand. Basing the decision making on the product or service demand, it is easy to predict the amount that will be purchased. The amount of the product or service that a consumer wants is the demand curve. For online retailers, the rule of demand and supply affects the consumer response to their business (Assael, 2004). Opportunity cost This is what the consumer must give up when purchasing a product or service. This can be referred to as the trade off factor that must be forgone in order to make a purchase. For example, if the cost of coffee is increased, a habitual drinker may buy reduced amount, but for someone who takes it randomly may opt not to buy it. The change of the amount that the consumer buys is known as elasticity of demand (Vellido, Lisboa & Meehan, 2000). Situational influences These are impermanent situations that have an effect on the way in which the consumers behave. The situational influence relates to facts, whether the consumer is able to purchase products from the marketer or does not buy anything from him, or buys a product that is a supplementary. The type of situational factors that affects a consumer differs depending on the product or personal matters. These are factors that are specific to time and the place of observation. They include aspects like the physical, social or time factors. These factors are physical factors, social surroundings, time, purchase reason and the buyer’s mood (Quester, Pettigrew & Hawkins, 2011). Physical surroundings This involves the buyers’ geographical surroundings and location. The physical surroundings is the design of the product store, furnishings, and other materials that leads to consumer stimulation. The marketer of the products is supposed to look for the required physical factors that will attract the customers. For online marketers a perfect and easy to navigate website can act as a physical surrounding that will attract the customers (Vellido, Lisboa & Meehan, 2000). Social surroundings This involves the shopping environment. These are features that are vital for interactions of the consumers and other people present during the purchase decision making process. This involves the people present to the consumer who can influence their purchase decision. Making an online purchase when in proximity with friends may affect the consumer decisions (Vellido, Lisboa & Meehan, 2000). Time This affects the consumer in a great way. It involves the time consumer takes to gather required information about a product looking for it and making payment. This also involves the time of the day and month especially vacations. The consumers tend to spend much during festive seasons. During this time, they may make a lot of online purchases (Assael, 2004). Purchase reason Purchasing reason is an important factor that affects their decisions. This is due to fact that a product is bought due to a certain reason. This in turn has a great effect on the time that is spent on purchasing different products. For online purchase, the reason for buying a product affects the time taken to make a decision and the willingness to spend (Assael, 2004). Buyers’ mood Temporary consumers’ mood is a situation factor that affects the consumer decision making process. For example, the health status, monetary status and exhaustation are part of buyers’ mood. The mood of the customer has a great effect on online purchase decision making. If the consumer is exhausted, they may make a decision to purchase their products using an online platform. For example, a parent may be too tired to go to a store for a product. This may lead to them making a purchase through internet (Petrtyl, 2012). Internal influencing factors Internal influences play a major role in the consumer behavior. These influences include perception, memory, motivation, emotion and learning (Quester, Pettigrew & Hawkins, 2011). Perception This is a process in which a consumer selects and analyses information in order to get the required picture. The consumers are in a space where there is a lot of information. Processing the available information is affected by three types of consumer perceptual defenses. These are selective attention, perception and retention. There is limited time for the consumer to address the information that is provided. This leads to selective attention. The perception that is given to the information that is provided is known as selective perception. This is due to the existence of a tendency to manipulate the information given to fir the preconception of the consumer. Sometimes, it is possible for a consumer to hear information but forget due to fact that it does not suit them. Attention occurs when the consumer receives information through a sensory receptor and processes it. The customers have different levels of stimuli depending on the situations (Quester, Pettigrew & Hawkins, 2011). Memory This refers to the accumulation of the learning processes in the brain. This involves long term and short term memory of a customer. The amount of information that is stored in short time memory is limited. This is memory that is currently in use by an individual. Long term memory is unrestricted and has the capability to store. This involves the customer having a recollection about the product or service. This involves a customer remembering an event and connecting it with a brand. A customer may remember how a certain online purchase was able to fully satisfy him or her and connect this experience with a brand (Vellido, Lisboa & Meehan, 2000). Learning This occurs when the consumer memory comes under alteration due to conscious or subconscious memory processing of information. The process can be declarative or procedural. Declarative involves using facts that are known while the procedural parts refer to having an understanding how these facts can be used. The marketers are supposed to have a prior knowledge on what the consumer is aware of (Kotler, 2003). This involves knowledge on what the consumer buys, the amount they pay and the place they buy. This helps the marketers in realizing any gap that may exist that can help in increasing the purchases. If the consumer lacks appropriate knowledge about a product it may lead to them not buying it hence leading to poor sales. There are consistent efforts by the consumers to gain the right information before making purchase decision. Learning levels can be low or high involvement. When the consumer is given motivation to learn about products is known as high involve. In low involvement, the consumer lacks drive in learning or processing the information. Learning can take place at home or at the place of purchase. For example, it can be through consumer socialization where they exchange ideas and gain more insights and experience about a product (Quester, Pettigrew & Hawkins, 2011). Knowledge about a product involves being able to understand its attributes, terminology and behaviors. This involves awareness analysis and image analysis. Image analysis involves the way consumers perceive the brand in their awareness. This involves the brand’s associated properties, feeling and its benefits. The knowledge that is relevant when purchasing a product is known as product knowledge. This involves having the right information on where the product is purchased and the time of purchase. The products location involves the consumer analyzing the competitors and choosing depending on the availability of product, location and how to locate it. The knowledge to make a purchase decision refers to having the relevant knowledge that is required in order to purchase a product. Lack of complete knowledge on how to use a product may result in low sales. If a consumer makes a purchase without relevant information, it can result in bad evaluation as the products may not be used in an intended manner the successful online retailing involves giving adequate information about a product (Quester, Pettigrew & Hawkins, 2011). Attitudes This refers to the consumer orientation about a product. The orientation can be favorable or unfavorable. The main components of attitude are cognitive, affective and behavioral. The customer knowledge and beliefs about a product or service lies under the cognitive part of attitude. The consumer actions and behavioral tendencies towards a product are known as the cognitive or behavioral component. The components are interdependently such that a change in one component leads to a change in the other two. Using attitudes, it’s possible to predict the behavior of the consumer. To have a good prediction, attitudes should be evaluated at a time when the behavior is seen. The time between the attitude measurement and the time of behavior taking place matters a lot on the accuracy of the results. Behavior is affected more by the social influences than the attitude. This is due to fact that behavior intentions are a product of attitudes and subjective norm. Attitude accessibility is a form of influence. Direct experience with a product has an influence to the consumer. This is related to the experience that the consumer had with the product. For an online consumer, attitude plays a major part in purchase decision making (Quester, Pettigrew & Hawkins, 2011). Motivation This is an unobservable internal force that helps in stimulating the consumer response and the direction of the response. A motivated consumer will be aroused toward a certain behavior in a bid to satisfy a goal. If the consumer is motivated to make an online purchase, they will strive to meet the demand due to the internal force pushing them. The stronger the consumer drive is, the more the urgency to satisfy a goal. One of the theories that explain the consumer motivation is Maslow’s hierarchy of needs. The theory looks at what has the capability to motivate the consumers. The consumers have to meet certain needs before having the required motivation to meet the others (Vellido, Lisboa & Meehan, 2000). Emotion This is a strong mental or an instinctive feeling that have the capability to affect the consumer behavior. The emotions can be triggered by the environmental issues or individual internal processes. Emotion varies from an individual to the other. For a consumer who wants to make an online purchase, the emotion plays a part in making decisions (Vellido, Lisboa & Meehan, 2000). External influencing factors The external influences play a very vital part in consumer decision making process cornering online shopping behaviors. The main external influences include culture, social satisfaction, demographics, reference groups, family and the geographic (Vellido, Lisboa & Meehan, 2000). Culture These are the habits and capabilities that are associated with the human beings as members of a society. They include beliefs, morals and customs of the consumer. The components of culture are materials and abstracts. Using the culture, the consumer is able to set boundaries in which they do their acts and thinking. This leads to creation of social norms. Deviating from the social norms may lead to punishment or banishment. Some of the norms are acceptable to some cultures but are not accepted in others. The culture is passed down from one generation to the other through the established institutions. In most cases, the consumers are not aware on how their culture affects their shopping behavior. Consumers from a conservative culture may find it hard to make an online purchase (Quester, Pettigrew & Hawkins, 2011). Social stratification, geographic and demographics The influence that has a capability to affect the way in which the consumers behave is known as social stratification. This refers to the existing social classes in the society. The classes may depend on the amount of money that person have or earns or a place where one lives. The community expects a certain type of lifestyle among a certain group of people. In the consumer behavior, occupation is a major indicator of the consumer social class. The consumers are more comfortable if they are in a group of consumers who share similar values. This is due to prestige, social class and socialization. A social class has values which determine how people should behave in the group (Black, 2005). Demographics are the characteristics that are exhibited by the human population. This has an effect on the consumer stratification and behavior (Black, 2005). The geographic categories include the population size, climate density and region. The geographic categories involve the age, education, income, race, religion and the size of the family. The consumer needs are as a result of both geographic and demographic factors. For a consumer who wants to, make online purchasing the demographics, geographic and stratification will influence the decision that is made. The accessibility of internet in a certain location has an effect on the consumer decision (Quester, Pettigrew & Hawkins, 2011). Reference group This refers to a situation where the consumer behavior is related to the perspectives that are held by a certain group. The effects of the reference groups are mostly seen on the young consumers. For young consumers, making an online purchase decision is in most cases affected by their reference group. If a consumer wants to purchase a product, they can be influenced to make an online purchase from a certain online retailer if their reference group does the same. The consumer is mostly prone to believe that making the purchase related to the reference group will help them to fit into it. The groups have the capability to influence the consumers in varying situations. The stronger the group pressure to the consumer, the more they will conform to a certain decision. The confidence of the consumer plays an important part in influence from the reference group. If a group perceives that online purchases are a prestige, a consumer may find making a purchase online in order to fit with the group (Vellido, Lisboa & Meehan, 2000). Family and household A family is consisted of a group of people who are related through, adoption, marriage or blood. Family has become complicated and the configuration changed. The setting has also been referred to as a household. For marketers, families are very important for their analysis. The families are evolving at a rate in which the marketers need to be evolving at. This will help the marketers to sells brands that will appeal the evolving family setting. The changes affects what the family needs, affords and the way of making their purchase decision. The consumers purchase their product as well as for their families. The decision making process of a family involves the manner in which the members of a family decides on their purchases. A family may opt to do online purchases depending on their decision which in most cases is affected by the marketers. Family purchases are different from purchases made by an individual. The roles of the family members are the main determinants of the purchase decisions. If the dominant member of the family prefers online shopping, the rest of the family has a high possibility of doing the same. (Vellido, Lisboa & Meehan, 2000). Consumer resources This refers to consumers’ income, confidence, health and education when making the purchase decision. The resources can be categorized as economic, temporal or cognitive. The financial capability of the consumer is referred to as the financial capability. The expenditure of the consumer finances is mostly affected by what they expect of future. The temporal resources consist of the budget and time constraints. The amount of money a consumer has plays an important part in their behavior (Assael, 2004). Time have a limit as opposed to budget. This leads to the tendency of the consumers to value time more than money. A consumer can make a decision to make an online purchase if it will help in saving time. Cognitive resources refer to the mental capacity that is available for processing the information. This is limited as the consumers can only be able to process certain amount of information at a time. The online retailers are expected to make their website simple and easy to use so that the consumers can be able to gain information more easily. Some of the products may not have the required noteworthy for the consumer to invest their cognitive resources. These are products which are referred to as low involving products. The attention of the consumer varies which leads to some of the products gaining attention while others are ignored. The marketers for the online products should avoid situations of information overload in their websites. This affects the consumer decision making process when making online purchases (Malhotra & Birks, 2006). Summary and conclusion The rapid growth of the internet sector has led to rise of e-commerce. This involves online business whose transactions are made over internet. Successful online business involves selling of products online where the consumers pay using the accepted online payment methods. The company must offer their products at a reasonable price and good quality. This enables them to attract consumers worldwide who believe in their quality services. Online industry has been faced with challenges associated with privacy and risks of cyber crime. The companies that participate on e-commerce have to ensure that their system is secure from cyber crime and other activities that might erode consumer confidence in making purchases. Online retailers have ensured they have achieved the required security through making their transactions tamper proof. The number of bookshop retail industry online business has increased over the years. This has led to a new group of consumers who make their purchases online to these retailers. In order to make a purchase, the consumer has to make an online purchase decision. This involves the consumer coming up with a resolve to make a purchase despite being affected by factors such as situational influences, supply and demand, opportunity cost, physical surrounding, and social surrounding purchase reason, time and problem recognition. The situational influences are the condition that affects the way in which the consumer behaves. These are factors that are related to time and location of the observation. These are effects that a situation has on the consumer psychology and behavior. The marketer tries to control these behaviors so as to affects the consumer purchases behavior. Problem recognition involves the consumer being aware of the product or service ability to satisfy a need, the consumer has to take action irrespective of the risk that is involved to achieve the expected benefits. Recognizing the problem helps in bridging the gap between the desired state and the present state. The online consumer shopping behaviors are affected by both internal and external factors. The consumers are affected by external factors such as culture, family, reference groups, demographics and social status. The internal factors involve perception, memory, motives, attitudes, emotions and learning. The influences of the consumer decision making process concerning online shopping behavior have a lot of similarities with the traditional shopping customers. Both internal and external factors that influence the consumers have similarities. For online retailers, having a well designed websites and making the required marketing related to consumer behavior can lead to high sales. Online retailers have to understand the consumers’ behaviors for them to market appropriately. The main drawback to online retailing is the security and privacy which affect the consumer behaviors negatively. The marketers have to ensure that the consumers have a positive perception cornering online shopping. The essay has established that the marketers are tasked with a thorough understanding of consumer behaviors for them to make the required sales. References Aron, M. L., Irwin, P. L., & Edward, H.C. (2003). Product Category Dependent Consumer Preferences For Online And Offline Shopping Features And Their Influence On Multi-Channel Retail Alliances, Journal of Electronic Commerce Research, 4(3), 240-266. Assael, H. (2004), Consumer Research: A Strategic Approach Boston: Houghton Mifflin. Black, G.S. (2005). Is eBay for Everyone? 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