INFLUENCE OF INTERNET MARKET ORIENTATION ON SHOPPING WEBSITES SUCCESS AN EMPIRICAL STUDY OF ONLINE SHOP BUSINESS IN TAIWAN ABSTRACT

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1 INFLUENCE OF INTERNET MARKET ORIENTATION ON SHOPPING WEBSITES SUCCESS AN EMPIRICAL STUDY OF ONLINE SHOP BUSINESS IN TAIWAN Wei-shang Fan, Nan Hua University, Ruei-Shiuan Chang, Nan Hua University, (886) , Lily Hwang, Nan Hua University, (886) , ABSTRACT This research aims to probe into the influence of Internet market orientation on successful cases of online shop. The research objects were the top three shopping websites (e-bay, Yahoo!, and PChome). Factor analysis and Structure Equation Model (SEM) were used to verify the overall model. The exploration is based on questionnaire survey, and the research applied contingency approach to analysis the results. The combination of promotional strategies becomes an important tool of Internet marketing, thus, requires proper and cautious planning. This research explores the influence of contingency and structure on decision-making results during the decision-making process. The empirical results showed that Internet market orientation can positively influence Internet marketing strategies, Internet customization and website design quality; Internet marketing strategies and website design quality can positively influence successful cases; Internet customization can positively influence website design quality; website design quality can positively influence Internet marketing strategies. Keywords: Internet market orientation, Internet marketing strategies, Internet customization, Website design quality, Successful cases INTRODUCTION With vigorous development of the Internet and growth of communication technology, e-commerce not only has changed the traditional business transaction model, but also led to enormous business opportunities. Companies can conveniently collect information on the market and customers through various channels, and establish customer related database, thereby, effectively deliver and disseminate information to internal and external members of the companies, so that company can respond customers demands through promotions (Min, Song & Keebler, 2002). As the Internet provides more and more comprehensive information, website design has become more and more complicated. Some common problems associated with online shopping websites include difficulty to find detail specification of the product even though it is listed on the webpage, lack of information classification and repetitive information. Because of these problems, users usually could not find the information they want, and waste too much time. Thus, online shopping websites should consider how to provide users with individualized information and service, and allow them to find the information they need by improving the efficiency of search. LITERATURE REVIEW AND HYPOTHESES This research aimed to construct a success model for shopping websites. The application of contingency theory framework followed the contingency model of contingency->structure->result

2 proposed by Fiedler (1967). He emphasized that in order to respond to different contingencies, companies must adjust their structures and strategies to obtain optimized results. Based on the above concepts of social system, we confirmed the cause and effect of website success, and constructed the contingency model, this research first considered Internet market orientation because market orientation created more consumer value and improved corporate performance (Sanzo, Santos & Vazquez, 2003; Narver and Slater, 1995; Jaworski & Kohli,1993). With regard to result construct, that only the websites providing customized service and positive design quality could increase customer satisfaction and repurchase intention to achieve website success. This research mainly assessed customer satisfaction and trust toward shopping websites after consumption, as well as their repurchase intention, for the basis of evaluating website success. Based on above, we constructed this research framework, as shown in Figure 1. Contingency Structure Output H3(+) Internet customization H5(+) Internet market orientation H1(+) H4(+) H2(+) H6(+) Website design quality H7(+) H8(+) H9(+) Website success Internet marketing i Figure 1 Research framework Three core factors of Internet market orientation include producing information needed by customers, processing and diffusion, collecting customers information, establishing customer database, and reacting to customer demand. The main concept emphasizes that the companies should understand customers true needs, as well as advantages and disadvantages of their rivals, then create values for customers through coordination of corporate resources and marketing strategies (Min, Song & Keebler, 2002). Internet challenges the operation of traditional market, makes prediction based on past operational records, and influence corporate and industry performance and marketing strategies completely. Kotler (2000) segmented consumer groups according to their purchasing characteristics or reactions, and designed marketing strategies combinations based on special needs and expectation of various consumer groups toward online shopping. Innovation and integration of new service technology play critical roles in market orientation and organizational performance. The integration of Internet technology and marketing could increase companies competitive advantages of marketing-related competence. H-1: There is significant and positive correlation between Internet market orientation and website success. H-2: There is significant and positive correlation between Internet market orientation and Internet marketing strategies. H-3: There is significant and positive correlation between Internet market orientation and Internet customization. H-4: There is significant and positive correlation between Internet market orientation and website design quality.

3 Because of the rapid development of Internet functions and aggressive development of customized services by website companies, online shopping activities have gradually focused on providing online shoppers individualized and convenient services to meet their needs. Because of the needs to search for shopping information through Internet, shopping websites have actively developed search function to maintain customer loyalty and establish competitive advantages (Srini et al.,2002). Experts suggested that Internet users value the convenience of webpage interface and individualized website design. Besides, functions such as customized search interface, user-friendliness, and substitute for physical contact could satisfy users needs for usability and enjoyment, hence, further strengthen their purchase intention. Burke (1997) suggested that strengthening customized services for shopping websites could be conducive to online users in searching product information. Szymanski and Hise (2000) found that the principal factors of American consumers satisfaction toward online shopping are convenience, website design, and financial security. According to above literature, this research proposed the following hypotheses: H-5: There is significant and positive correlation between Internet customization and website success. H-6: There is significant and positive correlation between Internet customization and website design quality. Lee & Kozar (2006) explored the factors affecting website quality, and argued that when companies select and design more flexible websites, they could achieve corporate financial and website performances. DeLone and McLean (2003) proposed the IS success model, which divided website quality into information quality, system quality, service quality, and vendor-specific quality. Their research findings showed that higher the website quality, better the corporate performance. In other words, website quality directly affects corporate performance. Liu and Arnett (2000) indicated that for website designers, websites must be able to cultivate customers interests, enhance their participation intention, and facilitate their excitement when using the websites. In addition, websites should have appealing characteristics to attract customers and allow them to enjoy browsing the websites. Szymanski & Hise (2000) argued that website design has significant and positive influence on Internet customer satisfaction. According to above literatures, this research developed the following hypotheses: H-7: There is significant and positive correlation between website design quality and Internet marketing strategies. H-8: There is significant and positive correlation between website design quality and website success. Online shoppers purchase behavior is affected by marketing strategies of the website companies. When Internet users obtain product information through Internet, companies can attract the consumers by more competitive prices. Therefore, Internet consumers with higher price sensitivity would be attracted by low-price strategies and their purchase intention would also increase (Jiang Mei-Hsiang, Yeh Kuei-chen, 2000). The rise of online shopping consumption is due to reduced channel cost and lower price, so that consumers build trust toward the shopping websites and develop purchase intention (Korgaonkar, 1984). Internet marketing is how a company focuses on target customers and provides service products or product information through Internet, then acquires analytical data and builds customer relation to accomplish mass sales. (Kalakota & Whinston,1996). Therefore, this research developed the following hypothesis: H-9: There is significant and positive correlation between Internet marketing strategies and website success. RESEARCH DESIGN Variable definitions and assessment are based on empirical results of related researches. Besides considering reliability and validity of the questions of original scales, we also generalized industry characteristics, environment and meanings of questions.

4 Questionnaire design of this research was based on literature review and questionnaire design of the related studies, and was revised and translated based on the requirements of this research. The draft of the questionnaire was reviewed by experts, and revised according to their opinions before entered into pre-test. The questionnaire was loaded onto and invitations letters were sent to blog users to fill in the questionnaire on the website. The questionnaire was distributed from early January 2007 to early February A total of 1000 questionnaires were distributed, and 269 were returned. After eliminating 49 questionnaires with incomplete and repetitive answers, there were 220 valid questionnaires; the valid return rate was 22.0 %. RESULT OF ANALYSIS This research examined the model and the result showed that the indices of overall sample model all reached the assessment criterion, as shown in Table 1. All the fit assessment indices were close to the criteria, except for GFI and AGFI of less than once actual transaction per month. Therefore, generally speaking, among overall samples of this research, the sample fit of average actual transactions of over once, once, and less than once per month reached the goodness of fit. Fix assessment indices Table 1 Analytical result of model fit Overall sample model (n=220) Actual shopping for once and at least once per month in average (n=99) Actual shopping below once per month in average (n=121) Judgment principle χ 2 value (DF) 282.4(138) (136) (138) The smaller the better χ 2 /DF <3 P value Not significant GFI >0.9 AGFI >0.9 RMR <0.05 RMSEA <0.08 NFI >0.9 CFI >0.9 PNFI >0.5 PGFI >0.5 Note:*P<0.05 **P<0.01 ***P<0.001 CONCLUSIONS This research validated the overall model of Internet market orientation, marketing strategies, customization, Internet marketing strategies and website success, as shown in Figure 2. The results showed that Internet market orientation could directly and positively influence Internet marketing strategies, customization and website design quality; Internet marketing strategies and website design quality could directly and positively influence website success; customization could directly and positively influence website design quality; website design quality could directly and positively influence Internet marketing strategies; however, only customization cannot directly influence website success. According to research observation, at present, the shopping websites in Taiwan have not developed complete customized service model from customers product ordering and price estimation. Therefore, product customization process cannot be established as in the technology industry, such as Dell. Finally, fit test of linear structural relationship model showed that overall theoretical model fit of this research met the test criterion, indicating that the theoretical model of

5 this research was supported. Management Implications Building shopping websites has become a popular marketing practice. Internet and technology information play significantly important roles in the global economy. With the development of technology, e-commerce becomes a mainstream economic body. Internet channel also have changed consumers living and consumption habits so that companies are facing inevitable reform and challenge. From the view of business practice, the companies must value the planning of Internet market orientation and establishment of Internet marketing strategies to attract consumers to their websites and make purchases. Another key to successful website operation is that the companies should provide complete shopping information, products, and services needed by individual shoppers to reduce their search time and allow them to be satisfied with the services. More importantly the companies should value the overall design of websites and provide complete product information to and concern about the security of website transaction to avoid the exposure of customers confidential data. In addition internal marketing related departments of the companies should communicate with other departments with focus on meeting customers needs and forming strategies accordingly. Internet is a changeable and future development, and changes will lead to new affecting factors at any time. Future researches can include new variables in their research framework and compare different industries in this model. REFERENCE 1. Burke, Raymond R., Virtual Shopping: Breakthrough in Marketing Research, Harvard Business Review, 1997,74 (March-April), pp DeLone W.H., McLean E.R., The DeLone and McLean model of information systems success: a ten-year update, Journal of Management Information Systems,2003, 19, pp Fiedler, F. E., Contingency theory, New York: McGraw-Hill, Kalakota, R. and A.B. Whinston, Frontiers of Electronic Commerce, Addison- Wesley Company, Kohli, Ajay K., Jaworski, Bernard J, Kumar, Ajith, MARKOR: A measure of market orientation, Journal of Marketing Research,1993, 30(4), pp Kotler, P., Marketing Management, the Millennium ed. Upper Saddle River, NJ: Prentice-Hill, Liu, C., Arnett, K.P., Exploring the factors associated with Web site success in the context of electronic commerce, Information Management, 2000, 38(1), pp Min, Song & Keebler, An Internet-mediated market orientation (IMO) : Building a theory, Journal of Marketing Theory and Practice, 2002, 10(2),ABI/INFORM Global, pp Narver J. C. and Slater J. S., The Effect of a Market Orientation on Business Profitability, Journal of Marketing, 1990,54(4), pp Sanzo, M. J., M. L. Santos, R. Vazquez and L. I. Alvarez, The effect of Market Orientation on Buyer-Seller Relationship Satisfaction, Industrial Marketing Manamement, 2003,

6 32(4),pp Srini S. Srinivasan, Rolph Anderson, Kishore Ponnavolu,Customer loyalty in e-commerce: an exploration of its antecedents and consequences, Journal of Retailing, 2002, 78, pp Szymanski, D. M., & Hise, T. R., E-Satisfaction: An Initial Examination, Journal of Retailing, 2000,76(3), pp