Online Vs. Traditional: Consumer Motivation

A very important aspect that retailers are always interested to know more about is the reason why people shop. Why someone would choose a red coffee machine over a silver one, or why someone would only purchase milk at a particular store. Obviously there is no single answer that will satisfy each question, but marketing literature has always been quite fascinated with consumer motivation.

Motivation can be defined as “an internal and complex process, which influences people’s behavior and is caused by particular motives” (Keisidou, Sarigiannidis, and Maditinos 2011, 33). One popular concept is the identification of two main motives for shoppers, which are hedonic and utilitarian. In short, hedonic shoppers are consumers who shop for fun, and utilitarian shoppers are consumers who shop with a goal in mind (Babin et al. 1994).

some behavior are beyond comprehension

This mindset translates well into the online environment, where hedonic online shoppers are motivated to find involvement with things that they consider fun. Typically, a hedonic online shopper would frequent online auction sites, hobby specific sites, and browse to their hearts content to seek a product specific online experience. On the other hand, the utilitarian shopper is depicted by motives such as convenience, information, selection, and the ability to control the shopping experience (Sorce, Perotti, and Widrick 2005).

While some researches suggest that the introduction of the hedonic and utilitarian concept in an online setting is quite seamless, other research suggest that there are significant differences. Scarpi (2006) argue that hedonic shoppers, who find pleasure in the shopping act itself rather than the acquired product, would not be motivated to shop online, because it would forgo the pleasure they get from shopping in a physical store. 

 sophie kinsella: making millions out of the hedonic shopper

 While there are other researches that use different frameworks, they are mostly reiterations of the hedonic and utilitarian classification. For example, Kargaonkar and Wolin (1999) identified seven different motives that may affect the consumers’ behavior in an online environment. These motives are: social escapism, transaction security and privacy, information, interactive control, socialization, non-transactional privacy, and economic motivation.

There are lessons to be learned here for both the traditional retailers as well online retailers. First, both type of stores have to cater for both type of consumers, which means that while shopping has to be a great experience, it should also provide an opportunity for utilitarian shoppers to just get in, get what they need, and get out.

Secondly, when it comes to engaging the consumers, so that their hedonistic needs are fulfilled, stores have to constantly innovate. Some retailers do not change their store displays for years, and they wonder why less people are interested in coming into the store and spend time shopping. 

 have you seen our new display? It's only been there since 1987

Understanding the consumer’s motivation is one thing, adjusting your strategy to capture the consumer is another thing. A lot of traditional retailers fail in their attempt to branch out to online retail because all they do is sell the same products online. What they do not realize is that consumers come to their brick and mortar stores not just because of the products they sell, but also because of the shopping experience that they provide. Until they manage to translate the shopping experience into an online environment, consumers will most likely shun the online versions of their stores.

References:

Babin, B., Darden, W. and Griffin, M. 1994. Work and/or fun: measuring hedonic and utilitarian shopping value. Journal of Consumer Research. 20: 644-56. Proquest. http://proquest.com (accessed March 13, 2012).

Keisidou, E., L. Sarigiannidis, and Maditinos, D. 2011. Consumer Characteristics and Their Effect on Accepting Online Shopping, in the Context of Different Product Types. International Journal of Business Science and Applied Management 6(2): 32-51. Emerald. http://emerald.com (accessed March 10, 2012).

Korgaonkar, P. and Wolin, L. (1999), A multivariate analysis of web usage. Journal of Advertising Research. 38 (1): 7-21. Proquest. http://proquest.com (accessed March 13, 2012).

Scarpi, D. 2006. The Fun Side of the Internet. In Impact of e-Commerce on Conumers and Small Firms, ed. Zappala, S. and C. Gray, 179-89. Aldershot: Ashgate Publishing Limited.

Sorce, P., V. Perotti, and Widrick, S. 2005. Attitude and Age Differences in Online Buying. International Journal of Retail & Distribution Management 33(2):122-132. Emerald. http://emerald.com (accessed March 10, 2012).

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Online Vs. Traditional: Information Search

There are many aspects of retail that can be discussed in regards to the consumer's purchasing behavior, especially when it comes to highlighting the differences between online purchases and traditional purchases. One of the most basic constructs that have been discussed about is the consumer purchase decision process. There are six steps of the consumer purchase decision process. In a sequential manner, the six steps are problem or opportunity recognition, information search, evaluation of alternatives, purchase decision, purchase act, and post-purchase evaluation (Boone and Kurtz 2011). Sartori (2006) suggests that while this process is somewhat replicated online, the process is wholly expedited and consumers place a different emphasis on each of the steps.

another variation of the purchase decision process

Various researches have highlighted the information search step to be a crucial point in the online shopping decision making process. Considering the amount of information that is available on the Internet, consumers have more opportunity to be diligent during this information search phase (Lunt and Moor 1998). This change of ease in the search of information empowers consumers and put them in an unprecedented position of control (Windham and Orton 2000).

 un-prece-dented

Moreover, since most consumers strive to achieve better efficiency in their decision making process, online shopping becomes a very attractive proposition (Park and Kim 2003). In an online shopping environment, shoppers are continuously streamed with product reviews, similar product comparisons and other relevant information. This reduces the information search cost significantly, and simplify the decision making process for consumers (Alba et al. 1997).

An opposing view suggests that the wealth of information available on the Internet does not necessarily mean an easier shopping experience. Some literature argue that because of the high amount of both choice and information in the Internet, consumers feels overwhelmed and would rather go to a brick and mortar store where a sales assistant can curate the information and sum up what the consumer need to know (Gay, Charlesworth, Esen 2007). It is also argued that successful online retailers has to be able to tailor the kind of information that they are offering to each specific consumers, limiting the effects of information overload (Wolfinbarger and Gilly 2001).

a severe case of information overload

 What does these differences mean for both traditional and online retailers? While online might have the edge at a glance, due to its wealth of resources, the power of personalized advice should not be underestimated. For online retailers, this means providing a specifically tailored experience for every shopper, which is easier said than done. Successful e-retailers have gone down this route in a big way, with both Amazon and iTunes providing auto recommendations to consumers based on their previous purchases.

But as tailor made as they try to be, online cannot match traditional retailers in this aspect. When brick and mortar stores have well informed and well trained staff, they have the ability to provide the best possible solution to consumers coming in with a need. Unfortunately, in a day where almost all retailers are battling a decreasing profit margin, there will always be pressure to cut training programs, hire the cheapest labor available, and just provide the bare minimum in order to survive. 

Industrial Revolution: the good old days of cheap labor

Theories and literature will only tell part of the story, it is practitioners who have to face it everyday in the field. With the challenges described above, only those who innovate will survive, whether that be in a traditional setting, or an online environment. While technology may improve everyday, most people will still look to make relationships. Retailers from both platforms should always strive to create relationships with their customers, and forge an impression that will lead them to come back.

References:

Boone, L. E. and D.L. Kurtz. 2011. Contemporary Marketing. New York: Cengage Learning.  

Sartori, L. 2006. Consumption on the Net. In Impact of e-Commerce on Conumers and Small Firms, ed. Zappala, S. and C. Gray, 179-89. Aldershot: Ashgate Publishing Limited. 

Lunt, P. and E. Moor. 1998. The Virtual Consumer: Electronic Commerce and the Reproduction of Consumption. European Sociological Association. working paper.   

Windham, L. and K. Orton. 2000. The Soul of the New Consumer: the Attitudes, Behaviors, and Preference of E-Customers. London: Skyhorse Publishing.

Park, C. and Y. Kim. 2003. Identifying Key Factors Affecting Consumer Purchase Behavior in an Online Shopping Context. International Journal of Retail and Distribution Management 31(1): 16-29. Emerald. http://emerald.com (accessed March 10, 2012). 

Alba, J., Lynch, J., Weitz, B., Janiszewski, C., Lutz, R., Sawyer, A. and Wood, S. 1997. Interactive home shopping: consumer, retailer, and manufacturer incentives to participate in electronic marketplaces. Journal of Marketing 61: 38-53. Proquest. http://proquest.com (accessed March 13, 2012).

Gay, R., A. Charlesworth, and Esen, R. 2007. Online Marketing: a Customer-led Approach. Boston: Oxford University Press.  

Wolfingbarger, M. and Gilly, M.C. 2001. Shopping online for freedom, control, and fun. California Management Review 43 (2): 34-55. Emerald. http://emerald.com (accessed March 10, 2012).

 

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The Future is Now: The Arrival of Gen Y

Traditionally, Christmas is a very good time for everyone involved. From consumers who are eager to shop for gifts for loved ones, to the retailers providing shoppers with goods and services. 2011 broke this mold, with Australian retailers reporting a drop in December sales figures in comparison to November. Retailers hoped for a 0.5 percent increase, and the 0.1 percent decrease came as a significant blow. This unexpected dip made 2011 the worst performing year for retail since 1984 (2011 Retail Sales Worst in 27 Years as Christmas Disappoints 2012). 

another reason Christmas is disappointing

On the other hand, another figure showed an opposite trend. It is expected that Australian online retail industry to grow by 40 percent by 2012, in comparison to 2010 numbers (Bullock, 2010). While latest figures show that online sales only amount to about 5 percent of total retail sales, it’s predicted that it will only be rising. This has prompted local traditional retailers such as David Jones, Myer, Harvey Norman, and Target to call for GST to be added to overseas online transactions (Greenwood, 2011).

E-commerce or E-retail is not a new phenomena, it has been around almost as long as the Internet. While the dot.com crash of 2000 dampens expectations somewhat, online commerce chugs along consistently, posting tremendous growth year after year (Dennis, Fenech and Merrilees 2004). Recent study from the United States predict that compared to 2011 numbers, there will be a rise of 62 percent by 2016, which will amount to 327 billion USD (Rueter 2012). While Australia is not as advanced as the United States when it comes to online commerce, its high Internet penetration rate means that it will not be far behind. 

With the emergence of generation Y as legitimate shoppers, prior literature regarding online shopping behavior needs to be revisited and examined. Generation Y are practically born with the Internet available to them, especially in developed countries. Online shopping literature has indicated that extended experience with the Internet will increase the likelihood of online shopping. With this in mind, while retailers have plenty to whinge about now, online retail still only amounts to about 5 percent of total retail spend. This number is predicted to rise rapidly, and traditional retailers can only survive by finding new and innovative ways to reinvent the whole retail experience. The arrival of Generation Y and their constant link with the latest information will surely push traditional retailers to rethink their strategy.

not all of them are that well informed.

The funk that traditional brick and mortar stores are currently experiencing is an issue that needs to be addressed by everyone involved, and marketers are key in trying to find a solution. Innovation is often hailed by many as the savior that will lead retailers out of this rut, but not many realizes that innovation takes many shapes and forms, and someone needs to create innovation that consumers would like to connect with. This blog will try to highlight various aspects that differentiates the experience of shopping online and shopping in a brick and mortar store, and try to find the reasoning of why consumers do what they do. We will also try to shed some light on some of the innovative practices that some retailers are trying to do in order to combat consumers declining interest of the physical store. Finally, we will also try to share the reasoning of why it is important to save traditional retailers, and why it does have an impact to all of us.

Reference:

2011 retail sales worst in 27 years as Christmas disappoints. 2001. http://www.marketingmag.com.au/news/2011-retail-sales-worst-in-27-years-as-christmas-disappoints-10373/ (accessed March 3, 2012)

Bullock, M. 2010. Australia’s Ecommerce Industry is Expected to Experience Significant Growth in the Coming Year. http://www.eway.com.au/ecommerce-news/post/2010/07/08/Australias-ecommerce-industry-is-expected-to-experience-significant-growth-in-the-coming-year087.aspx (accessed March 7th, 2012)

Greenwood, H. 2011. Switched-on Consumers Signal Sea Change in Retail. http://www.smh.com.au/business/switchedon-consumers-signal-sea-change-in-retail-20110107-19iq7.html (accessed March 8th, 2012)

Dennis, C.E., T. Fenech, and Merrilees, B. 2004. E-Retailing. Chicago: Routledge  

Rueter, T. 2012. E-retail Spending to Increase by 62% by 2016. http://www.internetretailer.com/2012/02/27/e-retail-spending-increase-45-2016 (accessed March 8th, 2012).

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