Digital Marketing. Consumer Behavior Online 10/19/2011. The Customer s Story. Consumers in the 21 st Century. Consumers in the 21 st Century, cont.

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1 The Customer s Story Digital Marketing Consumer Behavior Online A typical one-hour adventure in the life of a 25-year-old male: Listening music with his MP3 player, TV is on at the same time, and watching TV Program, His cell phone is ringing and answering the phone call. Computer is also on and chatting with his girlfriend, writing some comments from facebook He is a new type of consumer How can a marketer manage all these characteristics, differences and behaviors? Assist. Prof. Dr. Özge Özgen, Faculty of Business, Dokuz Eylül University Consumers in the 21 st Century 71% of U.S. consumers use the internet; the other 29% can be characterized as: Net evaders Don t think the internet is a good use of time, don t think they are missing out, don t need it or want it Net dropouts Tried the internet but stopped. They didn t want or like it, found it too expensive, or lived some technological difficulties Truly unconnected Low income and little education Intermittent users They are online but leave it for extended period Consumers in the 21 st Century, cont. In 2007, 1.4 billion people had access to the internet, 19% of the global population. Ten countries account for 53% of all global users and adoption rates range from 69-88%. Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the internet

2 Internet Reaches Maturity: Technology Acceptance Model 2 Determinants: Perceived usefulness (PU) and perceived ease of use (PEOU) PU is defined as the prospective user s subjective probability that using a specific application system will increase his or her job performance within an organizational context, PEOU refers to the degree to which the prospective user expects the target system to be free of effort 7-5 Innovation Diffisuion Theory Innovation diffusion is achieved through users acceptance and use of new ideas or things Innovation s relative advantage, compatibility, complexity, triability and observability The Internet Exchange Process Exchange is a basic marketing concept. It refers to the act of obtaining a desired object by offering something in return. Exchange occurs within the following contexts: Technological Social/cultural Legal 7-8 2

3 The Online Exchange Process Technological Context Individual Characteristics Resources Technological, Social/Cultural and Legal Context Internet Exchange Marketing Stimuli Outcomes Connect Enjoy Learn Trade 50% of online Americans connect to the internet at home with a broadband connection. Broadband users enjoy more multimedia games, music, and entertainment. The typical U.S. home has 26 different electronic devices for media and communication. Consumers spend an average of 1.5 hours online daily Technological Context and Children/Teens The amount of time American children and teens spend watching TV, playing video games or surfing the Internet has increased dramatically, 8 HOURS An explosion in the availability of mobile devices The number of children with cell phones has ballooned from 39 percent in 2004 to 66 percent today, From 18 percent to 76 percent for those with MP3 players 71 percent has a TV in their bedroom and 50 percent has a video game player About 74 percent of teens have a social-networking page on Face Book or similar site Source: Business Week,

4 Media Use on an Average Day Legal Context Despite piracy laws, illegally used software abounds. However, when the recording industry sued thousands of illegal music file downloaders, consumer behavior changed. In 2002, 37% of online consumers shared music files. Only 23% shared files in Social and Cultural Contexts One of the most important social trends is that consumers trust each other more than they trust advertising or companies online. Social/cultural trends have a huge effect on online exchanges. Sophisticated consumers. Information overload overwhelms consumers. Multitasking speeds up normal processes and lowers attention to each task. Social and Cultural Contexts, cont. Home and work boundaries are dissolving. Consumers seek convenience and have high expectations regarding customer service. Consumers cannot do without internet access: online oxygen. Self-service is required. Privacy and data security are paramount. Online crime worries consumers. 4

5 Individual Characteristics Researchers have identified a variety of shopping behaviors, such as the economic, store-loyal, recreational, convenience, price-oriented, brand-loyal, name-conscious, quality, conscious brand conscious, and impulse shoppers Individual Characteristics Individual characteristics also affect internet use. Age, income, education, ethnicity, and gender. Innovativeness and attitudes toward technology. Risk aversion and Trust Online skill and experience. Goal orientation. Convenience or price orientation. Innovativeness and Attitudes toward Technology Innovativeness is the degree to which an individual is receptive to new ideas online shopping can be viewed as an innovative way of shopping Consumers Risk Aversion and Trust Customers with less risk aversion are more likely to buy online. This was consistent with the fact that online shopping was seen as riskier than traditional shopping. Trust System-dependent uncertainty potential technological sources of errors and security gaps or to put it economically to technology-dependent risks Transaction-specific uncertainty the quality of the products and services that are offered on the Web 5

6 Consumer Resources Consumers perceive value as benefits minus costs. These costs constitute a consumer s resources for exchange: Money Time Energy Psychic costs Monetary Cost The internet exchange doesn t use cash or paper checks for online transactions. There are many forms of digital money. Credit and debit cards. Electronic checks through a third-party such as PayPal. Smart cards or Splash Plastic. Other innovative forms are appearing in other countries. Some mobile phones have chips that allow vending machine purchases by phone. Time Cost Global Internet Usage Online attention is a desirable and scarce commodity. Worldwide, the average user goes online 34 times/month, 69 minutes each time, visiting over 1,500 Web sites. Some researchers believe that consumers pay more focused attention online than with other media. 24 6

7 Energy and Psychic Costs Exchange Outcomes It takes effort to log on and check , especially for dial-up users. Short text messaging (SMS) via cell phones and PDAs is becoming more popular. Consumers apply psychic resources to understand information or when facing technical problems. Shopping cart abandonment and failed online purchases have numerous causes. Technical reasons Marketing problems There are 5 basic things that people do online: Connect Create Enjoy Learn Trade Each is ripe with marketing opportunity. Connecting Online in the U.S. Creating and Uploading Content in the U.S. 7

8 Entertainment Online in the U.S. Top 10 Search Terms for 2007 Learning and Getting Information Assist. Prof. Dr. Özge Özgen 32 8

9 Trading Online in the U.S. 9