Chinese and German consumer behavior when purchasing air tickets online

Transcription

1 BERLIN SCHOOL OF ECONOMICS AND LAW Institute of Management Berlin (IMB) Chinese and German consumer behavior when purchasing air tickets online Egor Bychkov BSEL Matriculation No.: Master s Thesis Master of Arts Chinese-European Economics and Business Studies Number of words: st Supervisor: Prof. Dr. Yang Chen 2nd Supervisor: Prof. Dr. Joachim Scholz-Ligma Berlin 30 May 2014

2 Abstract With the advent of the era of information technology the number of Internet users taking advantage of online shopping has been steadily growing. Such tendency is also applicable to the travel industry and its big part online air ticket bookings, which has rapidly adopted Internet technology and online services. Having its enormous population and huge number of travellers shopping online, Chinese online air ticket market presents great potential for domestic firms as well as for foreign agents. In this study consumer behavior of Chinese and German air ticket buyers is examined in a cross-cultural perspective. Based on the 5-stage model of the buying decision process and Hofstede s dimensions of national culture this research identifies differences and similarities between the Chinese and the Germans in terms of their information search, purchase and post purchase behavior. The findings reveal what sources of information are mostly used and what attributes of online air ticket offer are mostly valued by air passengers from these two countries. In addition, this study tests several hypotheses about travellers perceptions of sales agent s reputation and mobile devices usage and draws some conclusions and implications for a foreign air ticket agent planning to expand to Chinese market. Keywords: Consumer behavior, online shopping, online travel market, air ticket booking, China, Germany, cross-cultural comparison - 2 -

3 Table of contents 1. Introduction Research gap addressed, research question and strategic questions Contribution and structure of the thesis Literature review Air ticket sales structure and main definitions China s online travel market and air tickets sales Consumer behavior during the online travel booking Online air tickets purchase behavior Cultural aspects of online purchase behavior in China and across cultures Study objectives and hypotheses General objectives of the study Research hypotheses Data collection and results Questionnaire structure and development Samples and data collection Survey results Demographic data Travellers air ticket purchase experience Hypotheses testing Discussion and implications Research limitations Conclusion.. 37 Bibliography 39 Appendices..45 List of tables Table 1: Research dimensions of online travel booking behavior Table 2: Research dimensions of online air ticket booking intention.. 16 Table 3: Statements for the proposed hypotheses Table 4: Respondents demographic profile Table 5: Respondents air ticket purchase experience Table 6: Comparison of Chinese and German respondents attitudes towards air ticket purchase List of figures Figure 1: Simplified structure of air ticket sales Figure 2: Hofstede s dimensions of national culture for China Figure 3: Comparison of Hofstede s dimensions of national culture for China and Germany..21 Figure 4: Respondents area of residence

4 1. Introduction New era of information technology brought multiple advantages to the mankind. In particular, the Internet allowed us to search for goods in stores right from our apartments and find best offers in several clicks. More and more people all over the world prefer to shop online and order all kinds of products on different websites. Apart from consumer goods sales and e-tailing, online travelling sector has been booming in recent years and the number of users booking their vacations on the Web has been steadily growing. Historically, air tickets sales represented a big part of the travel industry and their share is even more significant when talking about online travelling. According to the forecast of International Air Transport Association (IATA), the annual number of airline passengers worldwide will reach 3,3 billion in 2014, which makes it approximately 9 million people holding an air ticket and boarding a plane every day all over the world. Over the last few years, digital environment has significantly shaped the relationship between primary ticket sellers, i.e. airlines, intermediaries (e.g. travel agencies or other ticket resellers) and their customers air passengers. One of the consequences of that process is that online electronic ticket booking started dominating as the main channel of shopping for flights in the end of the 2000s (Chao et al., 2009: 176). To say more, that process of transition towards e-ticketing is being fueled by the convenience, time saving and cost efficiency of paperless air tickets. Those travellers, who are too busy to purchase flight tickets via phone, in physical ticket offices or over the counter, benefit from online bookings in the first place (Chao et al., 2009). Such shift emphasizes the importance of the Internet for the future of travel and air ticket industries, especially in developing countries. Being the most populous country in the world and at the same time a rapidly developing economy, China presents great potential as a consumer market. For the online sales this is particularly promising due to the intensive development of the Internet in China. According to the report of China Internet Network Information Center (CNNIC) released in January 2014, the number of Internet users in China increased by 9,5% in 2013, reaching 618 million. However, because of huge total population, this number makes country s Internet penetration rate only 45,8%, which is a relatively moderate figure compared to those of many Western countries (CNNIC, 2014). Nevertheless, China remains a country with the biggest number of netizens that is projected to exceed 700 million in 2015 (Wonderful - 4 -

5 Copenhagen R&D, 2013). The number of international air passengers among them will also keep increasing and is expected to reach 100 million by the year 2016 (IATA, 2013). For the online travel market and air ticket sales it means that more and more Chinese travellers will opt for online distribution channels. The Chinese today head for other countries for educational, business or travel and shopping purposes. The ability to satisfy all such needs of Chinese visitors makes Europe an attractive destination for them. Therefore, European online air ticket sellers could take advantage of growing demand for air tickets to foreign destinations. However, in order to reach more Chinese passengers it is better to be present and recognized in the Chinese segment of the Internet. But one should remember that online behavior of Chinese ticket buyers may be different from that of the westerners because of different cultural background and distinct attitudes towards online ticket purchasing. And moreover, the size of the travel market in China and social factors in its society should not be neglected. That is why before devising a market entry strategy for China, it is crucial to comprehend the drivers of Chinese travellers buying decisions. 1.1 Research gap addressed, research question and strategic questions Today one can find plenty of academic works studying online consumer behavior and online travel market. Due to the linkages of the research question of this study to several different scientific areas, including consumer behavior online, travel bookings and air ticket purchase as well as online buying behavior across cultures, literature from each of these areas had been reviewed prior to the survey. According to the object of the research, existing related literature can be classified into the following categories: online consumer behavior and buyers attitudes towards online shopping, cross-cultural comparison of such attitudes, antecedents and determinants of online travel bookings and online air tickets purchase behavior. However, limited research has been carried out to compare actual consumer behavior across nations when purchasing air tickets on the Internet. Thus, following the suggestions of Amaro and Duarte (2012) for inquiring into a question of actual behavior in the context of travel bookings combined with the recommendations of Beldona et al. (2005) for future evaluation of a single travel product category, this paper intends to fill a small part of the described knowledge gap

6 Driven by the interest of a German air ticket agent to enter China s travel market this research was undertaken to understand travellers purchase behavior in China and Europe, with the latter represented by Germany. Understanding the customer is viewed here as one of the first steps for further estimation of the potential and prospects in a new market. Besides, such interest is also accompanied by several practical questions. Being closer to and more familiar with his domestic customers a German seller would like to know how Chinese consumers search for air tickets online as opposed to other nations. What are the preferences of people in China when they make a decision to book an air ticket and are these preferences significantly different from those of the Germans? Will a foreign air ticket agent have to overcome the psychic distance (Johanson and Vahlne, 1977) between himself and ticket buyers from China when the latter are too cautious about dealing with a foreign company? Altogether these strategic questions led to the formulation of the research questions for this study: How do Chinese consumers behave when they purchase air tickets online compared to the Germans? The focus of this paper is to observe, examine and analyze differences and similarities in consumer behavior of Chinese and German travellers when purchasing air tickets online. The reason for the interest in Chinese consumers lies in future market potential and growth of this industry in China. As for Germany, it was chosen as a representative of European society for several reasons. Firstly, as it was reported by World Travel & Tourism council in the end of 2013, German travel market is among the most developed travel markets in Europe with the total value of $US 152 billion, including approximately $US 11 billion of online travel market value. German Travel & Tourism industry s total impact on country s GDP accounted for 4,4% in 2013 and is expected to grow at the annual average rate of 1,7% over the next decade (World Travel & Tourism Council, 2013a). Secondly, Germany is the most populous country in the EU with the largest number of potential travellers and air passengers in this region. In 2013 total number of passengers landing at or taking off from German airports exceeded 200 million (the exact number is 201,6 million), adding 1,4 million as opposed to the year 2012 (Deutscher Reiseverband, 2014). Finally, the importance of the research related to the Chinese and German markets and business environment of these two countries in a cross cultural perspective was determined by the specificity of MA CEEBS program

7 1.2 Contribution and structure of the thesis Taking into account previous findings in the fields of online consumer behavior in China and across nations and the determinants of consumers online travel booking behavior, this paper aims at investigating what differences and similarities exist in the perceptions of people in China and Germany when they search and buy air tickets on the Internet. With the help of the model of consumer behavior and the theory of national culture this study proposes and empirically tests the hypotheses about air ticket booking attitudes of Chinese and German travellers. In addition, it observes their preferences and choices related to the attributes of online air ticket offers. Based on its findings this research provides some practical advice and strategic implications for foreign air ticket resellers and online ticket sales service companies that plan to expand their business activity to the Chinese online travel market. In academic sense this paper paves the way for further research into air passengers behavior in a Chinese-European perspective. Its contribution can serve as an example and an impetus for a deeper investigation into the described range of questions. The detailed review of relevant literature from different research areas along with the overview of China s online travel market and air ticket sales structure are presented in the next chapter. Following that, main objectives of the study are described, including several hypotheses, which were formulated and backed up with reasoning and arguments on the basis of the analysis of available existing findings in the related areas. Subsequent chapters provide the information about data collection process, survey results, their analysis, discussion and implications. In the end concluding remarks and recommendations for future research are drawn. 2. Literature review 2.1 Air ticket sales structure and main definitions To put it simple, air ticket booking is a process of purchasing a particular seat on board of a particular flight by a particular air passenger. Thus, it can be stated that the oversimplified structure of air ticket industry consists of two main parties: a seller an airline - and a buyer - an air passenger. However, the detailed structure is a bit more complicated

8 Firstly, there is an obvious need to technically establish a correspondence between an exact traveller and his or her flight seat. For this reason in the middle of the 20th century airlines started to introduce Computer Reservation Systems (CRS) information systems to store and retrieve information about air travel (Klein, 2002: 220). Later CRS developed into Global Distribution Systems (GDS) information systems that integrate access to multiple airlines and also encompass other travel related services, including hotel reservations, car rentals etc. (Iordache and Voiculet, 2010). Initially set up by airlines, such systems then have gradually become important independent actors in the structure of air ticket distribution and have been heavily used by travel agents as means of access to tariffs and information on availability of transport and accommodation services (Klein, 2002: 220). Secondly, the described system implies that there is a variety of ways for a traveller to purchase a ticket. To put it in a nutshell, nowadays the value chain of air ticket sales consists of two main channels. Originally airlines can sell tickets to passengers directly on their own websites from their proprietary CRS. But a much greater number of them is distributed via the second channel - indirect B2B sales, when intermediaries and resellers like wholesale platforms, online travel agencies (OTAs) or traditional offline agencies purchase tickets from airlines in bigger volume, and thus at lower prices, for future resale to final consumers. Both direct and indirect sales are usually performed with the help of third-parties so-called metasearch engines or similar sources that provide searching and price comparison of a variety of available offers from airlines as well as from OTAs and other resellers. In addition, OTAs and traditional agencies offer tickets by themselves on the Internet or in offices. Figure 1 presents a simplified structure of air ticket sales

9 Figure 1: Simplified structure of air ticket sales (adapted from Chea, 2006 and iresearch, 2013) 2.2 China s online travel market and air tickets sales According to the findings of World Travel & Tourism Council in 2013 Travel and Tourism industry in China generated a total impact of more than $US 800 billion of country s GDP. This figure includes direct, indirect and induced impacts and accounts for 9,3% of China s total GDP in 2013, which is larger than the share of such sectors as automotive manufacturing, banking, communication services and education (World Travel & Tourism Council, 2013b). During the next decade total contribution of Travel & Tourism sector to GDP is forecasted to grow at the average annual rate of 6,6%, leaving room for the development of all sorts of travel related businesses. Considering China s increasing Internet penetration rate and growing popularity of online travel booking, one can estimate huge market potential for companies providing online travelling services. Indeed, China s online travel gross merchandise volume (GMV) reached 220 billion RMB or approximately $US 37 billion in 2013, surging 29% as opposed to 2012 (iresearch, 2014). GMV indicates the total value of all travel products booked and transacted online, including direct sales and sales of third-party agents. The biggest part of China s online travel market is occupied by online air ticket bookings. Despite the fact that since 2011 its share has been slightly decreasing, it still constituted more than 60% of the total online travel market in 2013 (iresearch, 2014). Moreover, due to China s rapid economic development and growing newly-rich middle class, which tends to travel and thus to fly more, it is - 9 -

10 reasonable to expect air ticket industry to keep booming in the future. All in all, along with the development of aviation industry in China and existing tendency of this market towards maturity, the growth rate of air ticket sales is projected to stabilize at around 12% per annum (iresearch, 2013: 11). Total value of air tickets sales in China almost reached 300 billion RMB in 2013 with the average of almost 1 million tickets sold per day (iresearch, 2013). Accordingly, the market share of online air tickets distribution amounted for 27% in 2012 and was expected to further increase in 2013, exceeding 30% of total air ticket sales, reports iresearch Consulting Group. Online channels are getting extremely popular among Chinese travellers and are gradually taking over from the offline channels. However, even though OTAs are eroding the market share of traditional agencies, the latter still remain one of the major sources for air ticket purchase. The streets of Chinese megalopolises are still abundant in offline travel agencies offices, which makes one assume that many Chinese, especially of older generation, still prefer to buy tickets offline and to delegate to office sales managers the right of finding and choosing best offers. In terms of structure of the online air ticket market, in 2012 about 60% of tickets were provided by OTA s and the rest came from direct online sales (iresearch, 2013). At the same time, third-party sales platforms keep dominating over non third-party platforms as a major online sales channel for air tickets. Such platforms provided more than 60% of online ticket sales in 2012 and this number was expected to grow in 2013 (iresearch, 2013). Fierce competition between expanding travel platforms, OTAs and direct online sales is projected to be one of the main characteristics of this market in the next years. Another trend noted by market researchers from iresearch Consulting Group is a growing tendency of Chinese consumers to self-guided tours and outbound vacation. Independent planning and booking of different components of a journey by future travellers is expected to give additional impetus to the development of online air ticket sales and other related services. Finally, when talking about online sales another highlight of China s Internet development an advent of mobile era marked by the rapid growth of mobile Internet users - should not be neglected. By the end of 2013 more than 500 million people in China accessed Internet via their mobile devices (ZDNet, 2014). This number accounts for 80% of country s total Internet users and has grown about 19% as opposed to 2012 (CNNIC, 2014). In terms of online travel market it in the first

11 place implies a facilitated development of mobile travel applications apps and additional importance of mobile strategies for the incumbents and new entrants (iresearch, 2014: 21). 2.3 Online consumer behavior and online travel booking Understanding customers motives, stimuli and incentives, which drive their purchase decision, is a corner stone of success on the market and thus is one of the main goals of marketing analysts. In order to understand customers behavior the Five-Stage model of buying decision process has been developed. This model disaggregates the process of purchasing into 5 steps, namely, problem recognition, information search, evaluation of alternatives, purchase decision and post purchase behavior (Kotler and Keller, 2009: ). According to Kotler and Keller (2009), when buying a product, an individual will not necessarily pass through all the stages of the model. Depending on the complexity and availability of the product as well as on the proficiency and exactingness of a particular consumer, one or several steps may be skipped. Moreover, in each stage actual behavior of a buyer is determined by many factors. Due to different cultural and social backgrounds, personal traits, motives and attitudes different consumers have different needs triggered by different circumstances. That is why they search for the information with different thoroughness and intensity, pay attention to various attributes of the desired product and take into account their specific preferences in purchase decision process and post purchase behavior. It is noteworthy that information technology has significantly influenced the above described process. On the one hand, it has made some steps easier and has given additional advantages to buyers by providing unlimited access to the information and reducing their transaction costs, but on the other hand, it has added risk and uncertainty in other stages (Muller et al., 2011). Since the beginning of the 21st century, with the proliferation of the Internet and increasing number of benefits and advantages of e-commerce, the tendency of Internet users to shop online has been growing. Therefore, many studies have been devoted to consumers perception of online shopping. Consumers perception is based on their online shopping attitudes that refer to individual s psychology and determine person s shopping behavior and willingness to buy during the purchase decision process (Li and Zhang, 2002: 508)

12 Previously researchers endeavored to assess the importance and contribution of various factors that make impact on consumers attitudes towards online purchasing. According to the observations of Li and Zhang (2002) and Guo and Noor (2011), in recent years the scholars have identified and summarized the following antecedents of such attitudes: website quality and perceived usability, security and privacy on the Internet, vendor s credibility and reputation as well as product characteristics and after sale services. Additionally, other academics attached importance to personal and demographic features of online buyers, among which such factors as educational and cultural background, Internet knowledge and experience and daily amount of time spent online were listed. Development of the Internet and online sales had its impact not only on consumer goods market, but on other markets and industries, including travel industry. Travellers nowadays take advantage of convenient and facilitated information search on the Web and opt for online channels when planning and booking their journeys. Considering consumers preference for higher quality and lower prices, reduced search cost increases search depth and changes optimal online search strategy (Zhang et al., 2007: 21). Due to these facts online travel market and tourists behavior has drawn attention of various market researchers (Peng et al., 2013: 1). Amaro and Duarte (2012) point out in their review that, similar to the case of purchasing of physical goods, such antecedents as personal and channel characteristics have been studied in a travel shopping context. In this regard attitudes towards online travel booking, determinants of the decision process for purchasing travel on the Web and the relationship between those variables were scrutinized. Existing literature on that score is miscellaneous, so before getting engaged into this study it was necessary to sort out relevant factors from a broad range of findings. For that purpose the paper of Peng et al. (2013) and its summary were used. In their work Hongxia Peng and his co-authors systematize existing findings in online travel shopping and group them in accordance with 3 aggregated stages of consumer behavior model. In the first group findings related to information search behavior are revealed. The importance of online travel search is also emphasized by Conyette (2012), whose conceptual framework identifies search and planning behavior as a significant predictor of further booking behavior. In particular, the framework states that online travel booking intention is determined not only by attitudes

13 towards the Internet and online searching or functional, innovation and other needs of travellers (Vogt and Fesenmaier, 1998), but also by beliefs about travel websites and travel agents (Conyette, 2012: 8), which is important for this study. Additionally, the authors foresee growing popularity of mobile devices and suggest undertaking future research about their role in online travel searching. The second group of findings summarized by Peng et al. (2013) presents the determinants of online travel booking behavior in a purchase stage. Here for this research it was important to understand that online booking intention rests upon the characteristics of the website such as usefulness, convenience and security, characteristics of online vendors, especially their reputation and prices, and personal characteristics of consumer himself, including age, gender, educational background and Internet experience. These features were chosen from a variety of factors and taken into consideration for the research structure when creating a questionnaire. Moreover, future importance of mobile travel bookings was mentioned again in the described part of the summary (Peng et al., 2013: 281). The last part of the described review deals with customers loyalty formation after booking. For the survey of this study two main ideas were derived from this group of findings. Firstly, apart from website and information quality perceived value is important for customer satisfaction and possibility of repurchase, especially in the case of air ticket bookings (Llach et al., 2013). Secondly, offline service factors of online booking and their influence on loyalty formation have not been broadly studied so far both in online travel industry in general and with regard to airline tickets booking in particular (Peng et al., 2013: 282). Table 1 provides a summary of online travel booking behavior research dimensions

14 Table 1: Research dimensions of online travel booking behavior Online travel booking Stage Determinants and important factors Suggestions - Tourists functional and other needs - Role of mobile devices (Vogt and Fesenmaier, 1998) in online travel search - Beliefs about travel websites (Conyette, (Conyette, 2012) 2012) - Beliefs about travel agents (Conyette, 2012) Information searching behavior Booking behavior Post purchase behavior - Internet characteristics: usefulness, website quality, security, convenience (Heung, 2003); - Vendors characteristics: price, reputation (Kim et al., 2006); - Consumers characteristics: age, gender, educational background, Internet experience (Li and Buhalis, 2006); - Information quality (Li and Zhang, 2002); - Perceived value (Llach et al., 2013); 2.4 Online air tickets purchase behavior Factors influencing perceived value of online bookings (Peng et al., 2013); - Travel booking behavior with regard to specific product categories (Amaro and Duarte, 2012); - Future role of mobile devices in online travel booking (Peng et al., 2013); - Offline service factors of online travel booking (Peng et al., 2013) According to the review of Amaro and Duarte (2012), even though the studies related to online travel industry are numerous, academic papers focusing on specific travel product categories, and in particular air tickets, are less abundant in quantity. Nevertheless, there are several works directly linked to current research. First of all, Beldona et al. (2005) distinguish between high and low complexity travel products and states that online shopping motivations of these two categories are distinctively different. In a classification based on complexity air tickets belong to low complexity travel products, have more tangible parameters and thus are easier to evaluate (Beldona et al., 2005: 562). Importantly, online booking motivations of this type of products are driven by transactional objectives and customers desire to derive greater value. So accordingly, such purchases are associated with lower price and effective rewards programs (Beldona et al., 2005: 568). The research conducted by Sam and Tahir (2009) examines website quality factors as antecedents of online purchase intention of air tickets. The findings reveal that website design, usability and information quality along with trust and

15 empathy can give additional advantage to airlines, air ticket sellers or service providers and trigger customers online purchase intention (Sam and Tahir, 2009: 8). The notion of empathy implies personalization and individualized attention to the customer. It intertwines with the dimension of trust and altogether enhances the value and therefore strengthens buyers intention to purchase. Additionally, it is proposed that trust and empathy play a mediating role between website characteristics and final purchase intention (Sam and Tahir, 2009: 7). Similar approach was chosen by Bukhari et al. (2013), who added to the above mentioned factors several other constructs such as system quality, airline reputation and price perception. The framework proposed by the authors identifies and measures the relationship between these factors and consumers electronic satisfaction and intention to buy tickets online from airlines websites. Kim et al. (2005) and Kim et al. (2009) focus on one of the factors influencing travellers behavior in purchasing airline tickets on the Internet perceived risk. At first, the correlation between different dimensions of risk was established and their impact on customers willingness to buy air tickets online was analyzed (Kim et al., 2005). Later it was discovered that in overall risk of air ticket purchase security dimension is the most important. In addition it was found out that taking into consideration web vendor s reputation and recommendations from personal network are preferred as risk-reduction strategies when buying air tickets online (Kim et al., 2009). A more practical approach was undertaken by Toh et al. (2012). The surveys were conducted in order to examine passengers perception of online air ticket sales as well as factors affecting their actual behavior when making choices and buying air tickets on the Web. Several findings of this paper deserve attention in terms of their relation to this study. Firstly, the role of the Internet as a dominating channel to search flights and favorable attitude of passengers towards online travel agents were acknowledged (Toh et al., 2012: 83). Secondly, it was reported that, logically, leisure travellers are more likely to book air tickets on the web than business travellers, who most of the time rely on corporate travel planners (Toh et al., 2012: 84). Expectedly, lower fares were revealed to be one of the main motives driving passengers behavior. That is why due to the convenience of the Internet for comparing flights on the basis of price ticket buyers opt for online ticket sales channels. Interestingly, women were found out to be much more aggressive low price seekers rather than men. All in all, the paper by Toh et al

16 (2012) is one of the rare studies, which provides more practical than academic insights and implications about this sector of the travel industry. Another investigation providing grounds for this research was carried out by Park et al. (2009). In their work the determinants of air passengers buying behavior were analyzed in a cross-cultural context. The findings report that travellers purchase behavior depends on their expectations, ticket price and airline service quality and differs not only by airlines, but also across cultures, in particular between Korean and Australian passengers. The findings of papers related to online air ticket booking and travellers intention to purchase tickets on the Internet are summarized in Table 2. Table 2: Research dimensions of online air ticket booking intention Drivers of online air ticket booking intention Informational Transactional Trust and security Other - Information quality (Sam and Tahir, 2009); - Risk and its dimensions (Kim et al., 2005); -Convenience of information search (Toh et al., 2012); -Website usability (Sam and Tahir, 2009); - Low ticket price (Beldona et al., 2005); (Toh et al., 2012); (Park et al., 2009); - Buyers perception of price (Bukhari et al., 2013); - Rewards (Beldona et al., 2005); - Airline and seller s reputation (Bukhari et al., 2013); - Airline s service factors (Park et al., 2009); - Empathy (Sam and Tahir, 2009); - Cultural aspects (Park et al., 2009); - Traits and characteristics of travellers (Toh et al., 2012); 2.5 Cultural aspects of online purchase behavior in China and across nations Nowadays being established in Chinese market along with having the understanding of Chinese consumers traits has become an essential part of a business strategy of many companies. When talking about the specificity of Chinese consumers and their distinction from Western counterparts many authors (Gong et al., 2012; Wu and Ozkan, 2010; Mazaheri et al., 2009) often appeal to Hofstede s dimensions of national culture (Hofstede, 1991 and Hofstede, 2001). Each of the dimensions, namely power distance, individualism, uncertainty avoidance, masculinity and long-term orientation addresses different aspects of

17 culture. Power distance addresses the attitude towards inequality and measures the acceptance of it in society. The dimension of individualism deals with the interdependence among society members and relation between the individual and the group. Uncertainty avoidance describes how the society deals with uncertainty and ambiguous situations. Long-term orientation dimension helps to distinguish between societies attaching more importance to the future and those promoting the values related to the past and the present, including preservation of tradition and respect for it. And masculinity has to do with dominant values and motivations in society whether it is a desire to be the best or a concern about others and quality of life. Later the framework was extended by adding the dimensions of pragmatism and indulgence. According to the online Hofstede Centre, pragmatism describes people s attitude towards the fact that many things in life cannot be completely explained and fully understood, whereas indulgence is based on measuring the extent to which the society members control their impulses or desires and to which their life is regulated by strict norms. When applied to China and Chinese consumer behavior several dimensions deserve particular attention. All the scores for all dimensions of Chinese culture are presented in Figure 1. Here individualism vs. collectivism, long-term orientation and pragmatism are important for the understanding of the drivers of Chinese buyers behavior separately as well as compared to other countries. China Power Distance Individualism Masculinity Uncertainty Avoidance Long-term Orientation Pragmatism Indulgence Figure 2: Hofstede s dimensions of national culture for China [adapted from The Hofstede Centre] Scoring low in the dimension of individualism makes China a highly collectivist culture, meaning that the role of a group is very important in Chinese society (The Hofstede Centre, 2014). For the information search stage of the

18 consumer behavior model that means Chinese shoppers to a big extent rely on their network and interpersonal communication in order to acquire information (Mooij and Hofstede, 2011; Doran, 2000). Most often the Chinese seek for the information among their acquaintances, friends and family members, easier accept it from these sources and consider it in the first place when making a final purchase decision (Doran, 2002; Luo, 2009). Two other significant aspects are a very high score in long-term orientation and a high level of pragmatism of Chinese society. According to the Hofstede Centre, one of the important features of a pragmatic culture is the value attached to being thrifty and not wasting one s money and other resources. That is why price is revealed to be an important driver of Chinese consumer behavior during the purchasing process and the stage of evaluating of existing alternatives (Li et al., 1995). At the same time, in a long-term oriented collectivist culture the notion of harmony is heavily emphasized (Mooij and Hofstede, 2011). Due to that price may not necessarily be the main determinant for taking a buying decision. Depending on the product, situation and demographic characteristics a Chinese consumer can evaluate such attributes as seller s reputation, product quality and functions or brand higher than the price (Lee, 2005: 60). Moreover, Mooij and Hofstede point out that maintaining harmony influences complaining behavior of the society members. People in such cultures are less likely to submit an official complaint, if they are not satisfied with the service or product, but will distribute this negative review in own personal network. It is also much more difficult to win such customers back after their negative experience (Mooij and Hofstede, 2011: 189), which all in all elevates the role of seller s reputation and after sale service. During the last decade with the explosive growth of e-commerce in China online market and online consumer behavior has been of particular interest for consulting agencies (MEC China, 2011; KPMG, 2014) as well as for scholars (Li and Buhalis, 2006; Guo, J. and Noor, 2011). Several consulting agencies focusing on online business in China in their reports summarize the most typical traits of Chinese consumers (Beg et al., 2013; DDMA, 2011). Some of these traits are directly related to this study and stages of buying decision process examined by this research. Firstly, Beg et al. (2013) point out that the Internet is the most frequently used source of information for Chinese shoppers. Similar idea is reflected in the observation of DDMA (2011) stating that online information has

19 great impact on final purchase decision of Chinese buyers and Internet users. According to the findings of DDMA (2011), in China numerous online sources are taken into consideration prior to the purchase and it is rare that one channel prevails over the others. Depending on the product category, Chinese consumers use various combinations of sources to collect the required information and place different importance on different online channels (DDMA, 2011: 11). However, the report of Beg et al. (2013) also confirms that information from other consumers is often even more important and considerably shapes buying decisions of the Chinese (Beg et al., 2013: 2). Finally, the summary stresses that customers loyalty in china is often determined not by financial factors, but by company s image and appeal, which makes it more and more difficult to maintain (Beg et al., 2013: 4). Apart from profound cultural studies and interest of consulting agencies, Chinese consumer behavior and specifically online behavior and attitudes attracted the attention of scholars. For instance, Guo and Noor (2011) examined the factors, which influence the attitudes of Chinese consumers towards adopting online shopping. In their study it was found out that such variables as seller s reputation and marketing mix have a greater impact on the attitudes of Chinese shoppers than perceived usability, security or privacy. The authors emphasize the effect of product, price, promotion and place features on adopting online purchasing in China. They also arguably state that after sale service or security of online payment do not influence such adoption process and recommend online vendors to focus on merchandizing as well as product quality, price and brand characteristics (Guo and Noor, 2011: 30). Li and Buhalis (2003) also attempted to identify the influential factors of online shopping in China, but narrowed it down to travel products available on the Web. In this paper they mainly focused on socio-demographic factors and such perceptions of the Internet as complexity or compatibility, which altogether are important for adopting online bookings of tourism products by those users, who previously only looked and searched for travel information (Li and Buhalis, 2003). Corresponding to the cross-cultural context of this research, existing works have endeavored to study online behavior of different nations in comparison. When comparing China to the Western World, scholars in their approach bring into play Hofstede s dimensions as it is done in this paper

20 To start with, Gong t al. (2012) examined the attitudes towards online shopping in China and the US. Drawing on the theory of cultural dimensions the authors identified significant differences in the perceptions of online purchase process between these two countries. In particular, Chinese consumers, on the one hand, tend to see buying goods on the Internet as a more complex, but on the other hand, as a more advantageous and less risky way of shopping than their American counterparts (Gong et al., 2012: 32).However, several other studies reveal that the correlation between a positive attitude towards online transaction and actual intention to transact is weaker in collectivist societies like China than in individualist cultures (Chan and Lau, 2001; Tan et al., 2010). Therefore, online sellers should find the right message and clearly appeal to the consumers in China in order to transform this positive perception of online channels and transactions into a real intention to buy online (Tan et al., 2010: 12). Another study aimed at a comparison of consumers from China and Western Europe confirms the findings about the information search process, which were mentioned above. Vuylsteke et al. (2009) showed that the Chinese use the Internet as a source of information before purchasing more frequently than the Europeans, but not necessarily treat online information as a determining factor for the final buying decision. Interestingly, these scholars in their research investigated in what way shoppers in China use search engines and revealed that they rarely browse other pages after the first one (Vuylsteke et al., 2009: 18). This research focuses on online consumer behavior of Chinese consumers opposed to that of their German counterparts. Main prerequisites for such comparison stem from cultural Hofstede s dimensions of national culture. Figure 2 provides a diagram comparing the scores for each dimension for China and Germany [adapted from

21 China Germany Power Distance Individualism Masculinity Figure 3: Comparison of Hofstede s dimensions of national culture for China and Germany [adapted from The Hofstede Centre] The diagram shows that German and Chinese cultures significantly differ in most of the dimensions except for masculinity and pragmatism. In this research main focus will be on individualism, long-term orientation and pragmatism, which relate to different stages of travellers air ticket purchase behavior examined in the subsequent chapters. Differences in the dimensions of individualism and longterm orientation and similarities in the dimension of pragmatism imply that one can anticipate both distinct and similar aspects of behavior and preferences of consumers from these two countries. Uncertainty Avoidance Long-term Orientation Pragmatism Indulgence 3. Study objectives and hypotheses 3.1 General objectives of the study Based on the observation of the findings of existing academic works this study attempts to examine in a cross cultural context consumer behavior of Chinese and German travellers when purchasing air tickets online. For that purpose one part of the survey was devoted to travellers actual behavior and experience of air tickets booking. In particular, their preferences in several stages of buying process were examined. Following the methodology of the study by Toh et al. (2012), the first objective of the research was to understand how Chinese and German travellers act in the information search stage. Main interest was to find out how deep and profound the search process is - which and how many sources of information they use to find the best offer before finally booking a flight. Moreover, one of the

22 goals was to check if any of the sources (metasearch engines, online and offline travel agencies, official websites of airlines or even personal network) dominate and in which combinations they are used in both countries. Secondly, it was important to examine which attributes of air ticket offers people from these two countries take into account before making a decision to purchase from a particular vendor. Taking into account the observation of the results of previous studies provided in Table 2, this research in the first place focused on informational, transactional and trust and security aspects of decision determinants. Also buyers perception of each attribute was examined from the point of view of its relative importance compared to other attributes. Finally, consumer behavior in the post purchase stage was studied in order to discover which factors may attract a traveller to purchase from the same vendor more frequently. It mainly implied rewards, bonus programs and other factors that may be used to maintain customers loyalty. In addition, one of the questions of interest was how online air ticket buyers perceive new search services, whether they welcome new search options and are ready to adopt them. 3.2 Research hypotheses Another part of the research was aimed at discovering air travellers perceptions and attitudes towards information search, vendor s credibility and mobile devices as means of online ticket purchase. Thorough review of existing market reports, academic findings and cultural dimensions and characteristics led to the proposal of several hypotheses backed up with arguments and described below. The stage of online information search is scrutinized in terms of search depth and the number of sources used. On the one hand, both German and Chinese cultures are characterized by a highly pragmatic orientation as it was mentioned above. According to Hofstede, in such societies people approve of thrift and have strong propensity to save (The Hofstede centre). In Germany these values have been strong historically since the pre-industrial age and thorough evaluation before purchasing is often associated with the consumers from this country. And as for the Chinese, there is an old saying stating that in order not to worry about not knowing much about the variety of goods one should just compare them and find out which is better. Moreover, the proliferation of the Internet and its convenience has had a significant impact on consumer behavior in China. Firstly,

23 the findings of Gong et al. (2012) confirm Chinese online consumers perceive online shopping to be more useful and advantageous than do people from western countries. Secondly, online activity of Chinese buyers has been noticed because of their inclination to gather information not only from official brand websites, but also from social media, blogs, forums, online reports etc. before making a decision (DDMA, 2011). On the other hand, thorough search prior to purchasing in China to a big extent relies on recommendations received through the personal network (Doran, 2002; Luo, 2009). Living in a highly collectivist society, Chinese consumers often prefer personal sources of information to market ones in terms of trust and credibility (Doran, 2000). On the contrary, coming from a truly individualistic culture, a German buyer would rely on his own knowledge and experience obtained from external sources. In order to get this knowledge and to form a more objective picture it seems logical to undertake a more careful search. In addition, another dimension of the perception of online shopping may prevent the Chinese from checking more websites before booking the air ticket. Some of the findings of Gong et al. (2012) reveal that the Chinese perceive online shopping to be more complicated than do their western counterparts. Therefore, this may influence the views of Chinese travellers on the Internet usage for air ticket booking purposes and their information search behavior. All in all, based on these two conflicting argumentations the following hypotheses were proposed: H1a: Chinese and German travellers use equally large number of sources when searching for air tickets online or conversely, H1b: Chinese travellers use fewer sources for comparison when searching for air tickets online than do German travellers. The next concern of this research has to do with travellers perception of the ticket seller and his credibility. In terms of air ticket booking this aspect is somewhat specific, especially when metasearch engine is used to find the best flight fares. As it was mentioned above, search sources provide a comparison of ticket offers and prices from a variety of different agents. When ready to purchase, travellers are then redirected to the website of a particular partner of the metasearch service company, where they are required to fill in all the booking information and payment details. At the same time, some engines now extend