An Analysis of Online Consumer Behavior Between Different Generations

Master's Thesis , 2019 , 116 Pages , Grade: 4

Sociology - Consumption and Advertising

As a result of the internet comes into our lives fast around the world, the shopping habits of individuals' have started to change. Technological developments bring forth the idea of the continuous change. This paper is focused on online consumer behavior between Gen Ys, Gen Xs and baby boomers. The importance of this study is to analyze and make evident of the reasons behind online shopping between different generations. Since the online shopping activities are increasing nowadays, it is necessary to understand the leading reasons behind individuals' online shopping activities in order to develop better choices for consumers in a competitive market.

The paper builds on the relevant literature and it examines the consumer behavior of individuals by questionnaires. Furthermore, the hedonic and utilitarian motivational functions and their sub-dimensions will be measured in order to understand the online consumer behavior. To reach those objectives, non-random/ convenience sampling method is applied in Izmir to 384 sample sizes to identify all aspects of the online shopping and impact on consumer behavior. The data results obtained revealed in the paper to support the research questions.

It is determined that there are significant levels of hedonic and utilitarian motivations on online shopping between generations. The differences are particularly observed between Gen Ys and baby boomers within the scope of utilitarian and between Gen Ys and older generations (Gen Xs and baby boomers) within the scope of hedonic motivations.

As a result of the evaluations according to questionnaire, the results show that marketers need to focus on marketing campaigns to Gen Xs and baby boomers about utilitarian motivations. Beside this, they should concentrate on more hedonic motivations for Gen Ys and develop new marketing strategies.

Table of Contents

ABSTRACT

ÖZET

LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF FIGURES

INTRODUCTION

CHAPTER 1: AN OVERVIEW OF ELECTRONIC COMMERCE AND ONLINE MARKETING CONCEPT
1.1 INTERNET USAGE
1.1.1. In The World
1.1.2. In Turkey
1.2 ELECTRONIC COMMERCE
1.3. THE DEVELOPMENT OF E-COMMERCE
1.4. ONLINE MARKETING
1.5. ONLINE MARKETING CHANNELS
1.5.1. Business to Business (B2B)
1.5.2. Business to Consumer (B2C)
1.5.3. Consumer to Consumer (C2C)
1.6. ADVANTAGES AND DISADVANTAGES OF ONLINE MARKETING FOR FIRMS
1.6.1. Advantages
1.6.2. Disadvantages
1.7. ADVANTAGES AND DISADVANTAGES FOR CUSTOMERS
1.7.1.Product
1.7.2. Price
1.7.3. Place
1.7.4. Promotion

CHAPTER 2. ONLINE SHOPPERS AND GENERATIONS AS A FACTOR AFFECTING ONLINE CONSUMPTION BEHAVIOR
2.1. GROWTH OF CONSUMERS' SHOPPING ONLINE
2.2. ADVANTAGES AND DISADVANTAGES OF ONLINE SHOPPING FOR CONSUMERS
2.2.1. Advantages
2.2.2. Disadvantages
2.3. FACTORS AFFECTING CONSUMERS' ONLINE CONSUMPTION BEHAVIOR
2.3.1. Cultural Factors
2.3.2. Social Factors
2.3.3. Psychological Factor
2.3.4. Personal Factors
2.4. DEFINITION AND CLASSIFICATION OF GENERATIONS
2.4.1. Baby Boomers (born between 1946-1964)
2.4.2. Generation X (born between 1965-1980)
2.4.3. Generation Y (born between 1981-1994)
2.4.4. Evaluation of Different Generations With Respect to Online Shopping Habits and Attitudes

CHAPTER 3: SURVEY ON ONLINE CONSUMER BEHAVIOR AMONG DIFFERENT GENERATIONS
3.1. OBJECTIVE AND SCOPE OF THE STUDY
3.2. RESEARCH QUESTIONS AND HYPOTHESIS
3.3. QUESTIONNAIRE DESIGN
3.4. SAMPLING AND DATA COLLECTION
3.5 DATA ANALYSIS
3.5.1. Data Analysis and Findings
3.6. LIMITATIONS OF THE STUDY

CONCLUSION

REFERENCES

APPENDIX

LIST OF ABBREVIATIONS

Abbildung in dieser Leseprobe nicht enthalten

LIST OF TABLES

Table 1: Purposes of Internet Usage in Turkey

Table 2: Broad Difference between B2B and B2C Buying Behaviors

Table 3: List of Generations

Table 4: Top 10 Product Categories Purchased Online by USA Gen X Consumers (2010-Fall)

Table 5: Individuals who purchased product or service online within last 12 months in Turkey

Table 6: Online Activies of the USA Female Internet Users by Generation X

Table 7: Profile of Three Generations

Table 8: Online Activities of Different Generations

Table 9: Age Distribution of the Sample

Table 10: Gender Distribution Frequencies

Table 11: Marital Status Distribution of the Sample

Table 12: Education Level of the Sample

Table 13: Occupation Distribution of the Sample

Table 14: Distribution of the Job Position of the Respondents

Table 15: Social Class Distribution of the Sample

Table 16: Monthly Income Level Distribution of the Sample

Table 17: Average Annual Online Expenditure of the Sample

Table 18:MInternet Occupancy Distribution of the Sample

Table 19: Online Shopping Frequency Level Distribution of the Sample

Table 20: Frequency Distribution of the Most Preferred Product/Service Purchased Online

Table 21:Reliability Statistics ( Hedonic Motivation)

Table 22:Reliability Statistics (Utilitarian Motivation)

T able 23: The Mean Scores of Hedonic Motivation Items According to Generations p

Table 24: The Mean Scores of Utilitarian Motivation Items According to Generations

Table 25: ANOVA test- Differences in Online Shopping Motivations with Respect to Generations

Table 26: Multiple Comparisons- Tukey HSD Test

LIST OF FIGURES

Figure 1: Internet Users in the World: Distribution by World Regions- 2011

Figure 2: The Process of Electronic Commerce

Figure 3: E-Commerce by Region

Figure 4: Relationship between E-Commerce and Online Marketing

Figure 5: B2B Model

Figure 6: B2C Model

Figure 7: The Relationship between B2B and B2C

Figure 8: C2C Model

Figure 9: Reasons to Buy Personal and Family Products Online Total (%)

Figure 10: Percentage of Internet Users and Non-Users around the World by Different Age Groups

Figure 11: Pie Chart of the Sample Age Distribution

Figure 12: Pie Chart of the Sample Gender Distribution

Figure 13: Pie Chart of the Sample Marital Status Distribution

Figure 14: Pie Chart of the Sample Education Level Distribution

Figure 15: Pie Chart of the Sample Occupation Distribution

Figure 16: Pie Chart of the Sample Distribution Regarding Job Position

Figure 17: Pie Chart of the Sample Social Class Distribution

Figure 18: Pie Chart of the Monthly Income Distribution of the Sample

Figure 19: Pie Chart of Average Annual Online Expenditure of the Sample

Figure 20: Pie Chart of Internet Occupancy Distribution of the Sample

Figure 21: Pie Chart of Online Shopping Frequency Distribution of the Sample

Figure 22: Pie Chart of Frequency Distribution of the Most Preferred Product/Service Purchased Online

Figure 23:Analyzing Hedonic and Utiliitarian Motivations on Online Shopping within Gen Y, Gen X and Baby-Boomers- Perceptual Mapping on a Numerical Axis

LIST OF APPENDIX

APPENDIX 1: QUESTIONNAIRE FORM- ENGLISH 102

INTRODUCTION

Information and communication technologies (ICT) have been developed a lot since the end of twenty first century. Internet started to take an important place at the center of this information age. It provides people to interact fast and globally with others during purchasing or selling activities (Deniz, 2001:13). The form of business transactions transformed from traditional way to a differentiated and new ways on virtual platforms.

Internet is the largest computer network system throughout the world. It was established in 1969. Then, approximately two decades later internet was settled down started to be used as a medium of communication and information. During that time, online shopping also had started to be used in the United Kingdom. In the early years of 1990s internet was slightly in use in Turkey. But after a few years, the use of internet accelerated by an increase in internet service providers, domains and websites.

Internet is an essential tool for both people and firms. Internet provides a fast way to communicate. For example; professors can easily connect to internet, search for a topic and write a paper with his/her other colleagues from another country. Information flow and communication have become easy. On the other hand, firms can easily introduce their products/services to sell on their websites. Before the invention of World Wide Web (WWW), it was difficult to access information easily.

Jack Nasser who used to be the president and CEO of Ford Motor Company said, ''Internet is a powerful medium of communication channel for product development, logistics, retailing, services, etc. Thanks to internet, employees or employers can easily take decisions, communicate efficiently and fast with customers at low costs. More importantly, Internet helps to improve human capital.'' It seems that internet allows online retailing as an active communication channel. (Deniz, 2001:16-17).

Internet has both changed the way of people's shopping habits and enterprises' marketing strategies. Online shopping behavior can be explained by referring to a process of purchasing products/services via the internet. When potential consumers need for a merchandise or service, they search for need-related product/service online. They can collect information about alternatives and they can purchase online. Finally, a transaction is occurred and post-sale services will be provided by firms to those customers. The best seller products are luxury goods, insurance and credit around the world. In Turkey, they are categorized in books, CDs, DVDs, food, beverages, clothing and shoes.

Online shopping became one of the most popular internet activity following e-mail/ instant messaging and web browsing ( Li and Zhang, 2002: 1). Since internet has emerged as a part of today's modern life, most of the people prefer shopping online by taking the advantage of convenience, time saving, 24h availability, discounts (coupons), overseas purchases etc. rather than traditional shopping. Along with the development of technology, internet becomes widespread around the world more than other old-fashioned channels such as radio or TV.

Online shopping is the process whereby consumers directly buy goods or services from a seller in real-time, without an intermediary service, over the internet. When the commercial transactions are occurred between organizations and consumers online, it is called as Business-to-Consumer (B2C) online shopping. When a business buys from another business, it is called Business-to-Business (B2B) online shopping (Khoshnampour and Nosrati, 2011: 97). Internet provides a great opportunity for producers and consumers to do their business. By gaining the advantage of business to business and business to consumer online, people react very fast. In this competitive market, producers and consumers also come together to interact virtually. In online shopping, the buyer is connected interactively with the seller’s computer system. No third parties are involved.

When a timeline of online shopping is observed, some noticeable events were recorded. For example; Michael Aldrich invented online shopping in 1979. First, it was spread around the world from Europe. In 1985, Nissan started to sell cars and finance credit checking to customers online. In 1995 Amazon launched its online shopping site, and in 1996 eBay appeared. Alibaba Group was established in 1998 in China. Alibaba is a B2B website which serves to bring together importers and exporters from more than 240 countries and regions. Amazon.com is world widely known website which serves as a B2C website.

E-commerce website has a good scope in the present society. A firm should design and publish a reliable e-commerce website, because this is the window to online market. It will give a great opportunity to expose your business worldwide (Nasrin, 2012). It's now time to compete in an international market. There is a tight competition in the market. The most important issue is to increase the sales of the products or services by reaching to a large mass community. A well designed website is inevitable for a successful online marketing.

The crucial point and the purpose of this study is to investigate an analysis of online consumer behavior between intergeneration. The topic is researched and presented by a survey at the last part of this study. The survey part of the study includes a detailed questionnaire which is delivered to 412 respondents. 28 of them were incomplete or were not returned back, so 384 well-completed questionnaires were collected. Frequency analysis, means, one way- ANOVA, multiple comparison analysis by Tukey test, reliability analysis were utilized to analyze the questionnaires and to state the results.

According to Nielsen, generation is defined as group of contemporaries; all of the people who are born at approximately the same time, considered as a group, and especially when considered as having shared interests and attitudes (Hale, 2010). Basically there are four different types of generations. Each generation has its own distinct set of values from their social environment. Generations are labeled as Veterans/Silent Generation (born before 1945), Baby Boomers (born between 1946-1964), Generation X (born between 1965-1980), Generation Y (born between 1981-1994).

Each generation has some specific expectations, experiences, lifestyles, values, demographics that influence their buying habits. Many companies try to achieve reaching to multi-generational consumers by taking their attention. Today’s online sales come from early technology adopters who create only a small minority of the total population (Rogers, 1995). Research indicates that 81% of those who browse websites for goods and services do not actually make an online purchase (Gupta, 1996; Klein, 1998; Shim, et al., 2001; Westland and Clark, 1999). On the other hand, some people prefer to use internet as a necessity. For example; a businessman would like to purchase an airline ticket during his trip by connecting to internet on his laptop or any other mobile devices. Suddenly, internet becomes a necessity for him since he has to fly to his next destination urgently. Most people prefer to do their transactions online especially for some services such as booking travel or buying concert tickets. The ability to do online transactions made the process much easier and more efficient (A Nielsen Global Consumer Report, June 2010). According to a survey which was conducted by The Nielsen Company in March 2010, online consumers' behavior was examined around the world by reaching to an over 27,000 internet users. Due to the survey results, most people intended to purchase books and clothing/accessories/shoes online. Social media and other factors are found to affect people's decisions to spend their money.

Technological development accelerates both consumers' online shopping frequency and online marketing implementations. Even so, there are some factors that affect online purchasing habits, it is foreseen that intergenerational differences has an impact on online consumer behavior. The main aim of this study is to analyze the relationship between intergenerational differences and online consumer behavior.

This paper is composed of the following chapters. Chapter 1 explains an overview of electronic commerce (B2B, B2C and C2C), online marketing concept, its growth in Turkey and around the world, advantages and disadvantages of online marketing for firms and customers. Chapter 2 reviews online shoppers and factors affecting their online consumption behaviors, growth of consumers shopping online, advantages and disadvantages of online shopping for consumers, factors affecting consumers' online consumption behavior, definition and classification of generations, evaluation of different generations with respect to online shopping habits and attitudes, . Chapter 3 introduces the hypotheses of the study that is presented by a survey showing the relationship of online consumer behavior within different generations.

CHAPTER 1 : AN OVERVIEW OF ELECTRONIC COMMERCE AND ONLINE MARKETING CONCEPT

1.1 INTERNET USAGE

The invention of World Wide Web has changed the way of people's shopping habits. The boundaries of shopping such as time or place have disappeared after the number of online shopping web-sites increased. The internet has now become an important medium for communication and information exchange in our daily lives.

1.1.1. In The World

According to the data dated approximately there are 2.267 billion internet users out of 6.930 billion people around the world. This means that 32.7 % of the population has been penetrated in the internet worldwide ( Internet World Stats, 2011).

Figure 1 below displays the regional distribution of the whole internet users around the world. Internet is mostly used in Asia with 44.8 % of the whole internet users worldwide. Europe is ranked the second with 22.1 % while North America is the third with 12 %. Latin America / Caribbean, Africa, Middle East, Oceania / Australia continents follow those three big continents, respectively.

Figure 1: Internet Users in the World: Distribution by World Regions- 2011

Abbildung in dieser Leseprobe nicht enthalten

Source: Accessed from http://www. internetworldstats . com/ stats.htm, on 12.04.2012

1.1.2. In Turkey

Turkish Statistical Institute (Turkstat) conducted a research about individuals using computer and the internet in the last three months in 2011 by age groups (%). Percentages show that young people prefer internet more than middle-aged and old people. For example; while the computer usage percentage is 32.2 in 2004, it increased to 68.5 % in 2012 for ages between 16 and 24. The internet usage percentage is 26.6 in 2004 while it increased to 67.7 in 2012 for the same age interval. It's easily observed that those percentage levels are at a low level for middle and old age groups. For ages between 55 and 64, the computer usage is 2.3% in 2004 and 12.5% in 2012. The internet usage of the people between ages 25 and 54 is also at a low level which is 1.6 % in 2004 and 11.9 % in 2012. The internet usage percentage is 55.5 % in urban areas while it is 27.3 % in rural areas according to 2012 newsletter published by Turkstat (Turkstat, 2012).

Turkstat conducted a research in between January-March 2011 to find out the purposes of using internet among Turkish internet users who are between ages of 16-74. The results of the survey are given in Table 1 below. 72.7 % of the respondents use internet to read or download online news, newspapers or magazines. The second purpose of using internet is mentioned to be seeking health-related information by 54.1 % of the sample. Reading and posting opinions on civic or political issues via websites (blogs, social networks such as facebook, twitter) is the third frequently mentioned purpose by 50.8 % of the respondents. Online banking leads the field among internet activities by 15.8 % in Turkey. Online banking activities are done by both business-to-business (B2B) as commercial banking and business-to-consumers (B2C) for services such as online payments. When the statistics are generally evaluated and interpreted, it is seen that internet has penetrated into peoples' lives. People are using the internet to satisfy their needs more day by day in rural than urban areas.

Table 1: Purposes of Internet Usage in Turkey

Abbildung in dieser Leseprobe nicht enthalten

Note: Respondents have a choice to select multiple responses. Therefore, total percentages do not reach to 100 % in both rows and columns.

Source: Turkstat (2011). Accessed from http:// www . tuik. gov. tr / Pre Istatistik Tablo . do ? istab_id = 46 on (15.03.2012)

1.2 ELECTRONIC COMMERCE

Development of internet usage throughout the world in all continents has given an important opportunity for marketers to reach customers all over the world. Boundaries between countries have disappeared through internet creating a single market which contains all countries in the world accessible via internet. The opportunity provided by the internet made marketers benefit from it through designing websites, advertising through the internet and even opening their virtual retail shops and selling through the internet. World Wide Web is the most revolutionized technology which changes the business environment dramatically.

Internet provides the opportunity for businesses and customers to conduct business virtually which is called “electronic commerce”. Electronic commerce which is abbreviated as e-commerce refers to ''the buying and selling of products or services over electronic systems such as the internet and other computer networks'' (Laudon and Traver, 2003: 10).

In the literature, organizations are divided into two categories in the new economy by the emerging of information and communication technologies (ICT). One of them is known as ''brick and mortar''. Brick and mortar is an organization which operates physically through their physical stores at which they sell or provide their goods and services. It's related to traditional shopping. On the other hand, some organizations might choose to sell through commercial websites. This type of organizations is called ''click and mortar''. Those organizations sell products/services online and also have physical stores where they store their goods. Click and mortars link the virtual and the physical world. The competency between firms started to shift from physical world to virtual environment while the rivalry of firms increases.

It's also easy to observe the increasing number of retailers who starts selling both on the internet and brick and mortar. Sometimes, physical interaction becomes an important matter in a purchase decision. Online shopping may not be an appropriate way if a product would be purchased by only touching or feeling to judge its quality or if it costs a lot because of logistics. In this respect, firms experience their websites only to display and advertise their products/services (Adelaar and Liu, 2005). In a category of brick and mortar firms, some products/services must be produced and consumed locally while others such as large appliances would be more costly to transport. Conversely, it's possible to produce and deliver many products/services physically and electronically (Steinfield et al. 1999).

Figure 2 below represents the flow of electronic commerce. Basically, on the one side, there are customers who have needs. On the other side, there are vendors who are willing to satisfy those customer needs. When a customer decides to purchase a product/service online through his/her computer or any other electronic device, e-commerce process starts. During the flow, orders are taken into account and many institutions mediate for e-commerce. At that point, vendors are responsible to fulfill his/her customer's need within a specific period of time. The flow is the same as traditional purchasing process. However, the orders are accepted online so that it is delivered fast and cheap.

Figure 2: The Process of Electronic Commerce

Abbildung in dieser Leseprobe nicht enthalten

Source: Söylemez (2006): 14.

The other e-commerce networking systems can be stated such as telephone, fax, TV, EFT (electronic fund transfer) and EDI (electronic data interchange). E-commerce is not a new phenomenon in the B2B context. Big companies have been using EDI for years (Davis, 2000: 33). Internet is the most commonly used and known tool. World Wide Web provides organizations and people to interact virtually and enables them to transact commercially. On the other hand, e-commerce term is used as a distribution channel, a tool for enterprises to display their goods/services on a virtual platform. According to a definition of International Trade Centre, e-commerce is defined as ''distribution of goods/services, marketing and sales transactions in a virtual environment'' (Söylemez, 2006: 13).

Telephone is the common medium of communication, however it does not transmit the vision and it is also expensive. Telefax was used to be a great communication channel especially for commercial transactions, but it also had some negative sides such as low quality print and being soundless. Internet became a necessary tool in this virtual environment. Most of the companies establish a commercial website which shows their products/services transparently on their e-catalogues. Buyers and sellers can easily satisfy their needs. Therefore, in this competitive market, business processes are treated more easily, fast, cheaply and globally (Yeşil, 2008: 21–22).

The future of e-commerce shifts the understanding of consumers' and customers' ideas and makes some fundamental changes virtually (Slywotzky, 2000). Internet allows removing physical barriers so that even the smallest business around the world conducts business and makes purchases online. Those firms publish virtual brochures to market their products/services on internet servers. Commercial websites provide millions of internet users to benefit 24 hours a day (Wen, Chen and Hwang, 2001:5).

E-commerce is widely spread around the world especially on some sectors such as telecommunication, information technology (IT), finance, retailing, tourism and energy. The number of internet users is constantly increasing which also signifies the increase of online purchasing (Joines, Scherer and Scheufele, 2003).

1.3. THE DEVELOPMENT OF E-COMMERCE

The statistics show us that information technologies have given rise to the prosperity and growth of the economy. Japanese and the USA government allocate and spend money on the development of e-commerce. There are some institutions such as Committee on the Improvement for Electronic Commerce and Electronic Commerce Promotion Council of Japan which were established in 1995 and 1996 (Söylemez, 2006: 18-19). According to International Working Group Report, the above mentioned institutions focus on issues like consumers' procurement tendencies, internationalization of online stores, expanding personal computer usage, firm and consumer electronic business transactions, delivery of goods (customs procedure, after sales service, returning items), copyright, trademark, domain name, taxation and business management (Söylemez, 2006: 20).

In Turkey, the e-commerce volume is insufficient due to low rate of PC ownership, low number of internet users and lack of trust in e-commerce activities. By the development of technology, e-commerce activities gain speed (Söylemez, 2006: 22). When the official figures are presented for Turkey, an individuals’ online expenditures jumped from $19.9 in 2001 to $61.4 in 2004 (Küçükyılmazlar, 2005: 1).

As it's shown in Figure 3 below, the overview of European Internet usage data, e-commerce volume seems quite strong when the percentages are evaluated. Nearly 70 % of the internet users are related to e-commerce activities and purchase a product/service on the internet in Northern Europe while it decreases to around 35 % in Eastern Europe. The percentage levels are around 50 % and 60 % in Southern and Western Europe, respectively.

Figure 3: E-Commerce by Region

% of respondents who have ever purchased a product or service on the internet

Abbildung in dieser Leseprobe nicht enthalten

Source: Borrel (2010). Accessed from http:// www . iabeurope . eu /media / 43499 / mcdc % 20 european % 20 overview . pdf on 17.05.2012.

When the Turkish citizens' profile who access Internet is reviewed, online shopping is ranked as the seventh out of 10 answers. 20 % of females who are 40-54 years old indicated that they prefer to use internet for shopping. Another survey is applied to identify the most frequently visited websites. Amazon.com, Kangurum.com are some popular online shopping websites in Turkey. People mostly prefer to purchase books, CDs and clothing online. Food/beverages, computers/electronics, DVD and VCDs are the other types of products that people go for online in Turkey.

Some people are suspicious about shopping online. The survey results show that ''unreliability and mistrust '' are the most important barriers about online shopping which is similar to the situation in the world (Deniz, 2001: 142-150). However, there are some precautions that can be taken by enterprises. Those are discounts, free shipping or returning the items. Returning the items is the most preferred one out of other choices. Especially, internet allows small scale firms to present the products / services globally around the world. At the same time, online marketing lets the firms to focus on customer oriented procedures; so that they can succeed on customer loyalty and strengthen the customer relationship management.

1.4. ONLINE MARKETING

E-commerce includes online marketing. Online marketing will be the entry point of small and medium enterprises (SMEs) to carry out e-commerce. Online marketing is the most important and basic internet business activity. E-commerce cannot be separated from online marketing, but at the same time online marketing is not equal to e-commerce (Meng, 2009).

Figure 4 below represents the relationship between e-commerce and online marketing. As it's shown, e-commerce has some basic flows such as product, finance, information and logistics. Online marketing includes information flow relating external customers.

Figure 4: Relationship between E-Commerce and Online Marketing

Abbildung in dieser Leseprobe nicht enthalten

Source: Meng (2009). Accessed from http:// www. academypublisher . com / proc / isip09 / papers / isip09p225.pdf. on 05.05.2012

Online marketing can be defined as ''the use of the internet and related digital technologies to achieve marketing objectives, selling products or services via internet and support the modern marketing concept''. In practice, internet marketing will include the use of a company website in conjunction with online promotional techniques such as search engines, banner advertising, direct e-mail and links or services from other websites to acquire new customers and provide services to existing customers that help develop the customer relationship (Chaffey, et al., 2002).

The number of commercial websites that firms establish is increasing day by day around the world. People would like to satisfy their requirements online. Thus, the demand of online marketing industry is increasing. Enterprises compete in a virtual environment where they strive to sell more and sustain a well-developed customer satisfaction. On the other hand, people are affected by some factors such as price, trust and convenience while they are using internet as a consumer. Thus, these factors are highly relevant influencers on the online consumer shopping behavior (Brengman, et al., 2005). It's so easy for a person to search for a product, compare its specifications, qualities and prices online.

1.5. ONLINE MARKETING CHANNELS

In this millennium, traditional business transactions were left behind because they started not to meet today's business conditions. Communication channels are accelerated by internet between consumers and firms. Beyond these business models, new online marketing channels which are also called e-business models such as B2B, B2C and C2C are emerged to satisfy new demand (Javarauskien and Pilinkiene, 2009: 85; Özmen, 2009: 125–6).

1.5.1. Business to Business (B2B)

B2B is simply defined as ' inter-organizational marketing. It's related to commercial transactions between an organization and other organizations'' (Chaffey, 2009:18). B2B model encloses the highest trade volume within the scope of electronic commerce. In 2005, 80 % of e-commerce is done through B2B with over $ 1.5 trillion transactions in the USA (Turban, 2009:18). It's the most common type of e-business model.

B2B activities are basically done through e-marketplaces or extranet. According to a survey done by Forrester Research in 1999, 90 % of total online sales are dependent upon B2B activities (Deniz, 2001:13). For example; Alibaba.com is a pioneer website for enterprises to meet in a virtual platform. Those firms indicate their needs and other parties reply them by e-mail or through any other communication channel such as telephone.

B2B transactions include transactions such as wholesale trade; company purchases of services, resources, technology, manufactured components or capital equipments. On the other side, it also includes financial transactions between companies such as insurance, credits, bonds, securities and other financial assets (Reiley and Spulber, 2000: 2).

Most B2B organizations try to achieve some benefits on e-commerce platform such as improving operational efficiency with a lower cost; strengthen relationships with its existing customers and building new and steady relationships; growing up the business; delivering the right information to partners, distributors and customers (Oracle, 2011: 2-3). B2B provides customer self-service options. Through online channels, by approving buyer registration, delivering online catalogues, displaying contract-based pricing, contractual terms and conditions automatically become easier (Oracle, 2011: 3).

Figure 5 below represents the flow of B2B transactions. The transactions occur between seller and buyer businesses via Internet. Firstly; seller firm hosts product details online. Secondly; buyer institution accesses product information through the seller's website. Then, buyer places an order for the product. Lastly; seller receives order processes and dispatches products.

Figure 5: B2B Model

Abbildung in dieser Leseprobe nicht enthalten

Source: E-commerce Models. Accessed from http:// www. eservglobal. com / uploads / files / index. pdf on 10.03.2012.

1.5.2. Business to Consumer (B2C)

B2C is another type of e-business activity that is done between end users and firms. End users (consumers) have the greatest purchasing power. People go on the internet and purchase any kind of products/services through those B2C websites at anytime and anywhere (Deniz, 2001:13). B2C model consists of procedures between enterprises and end users. For example; Amazon.com is the most commonly known B2C website.

Managers should determine some goals which are listed below for his/her enterprises in the scope of B2C (Deniz, 2001:13).

- To try to be a leader brand in online sales among other enterprises.
- To be proactive on customer relationship.
- To manufacture at a highest quality.
- To do market segmentation.
- To decrease total cost by concentrating on efficient techniques for packaging, product delivery.
- To shorten the time of order and sales processes.
- To meet market demand fast
- To succeed website promotional activities.
- To strengthen firm and brand image.
- To achieve new source of income.
- To increase market share.
- To enhance supply chain.
- To increase service quality.
- To provide durability of customers.
- To be accessible globally.

Figure 6 below points B2C business model and how it works. The transactions occur between the seller business and the buyer via internet. Firstly; the seller business hosts product details to its website. Secondly; individuals who are consumers surf the internet and find the products they are looking for. Then; consumers place an order for the product. At the last step, seller receives the order processes and dispatches products.

Figure 6: B2C Model

Abbildung in dieser Leseprobe nicht enthalten

Source: E-commerce Model. Accessed from www. eservglobal.com / uploads / files / index . pdf on 10.03.2012.

1.5.2.1. The Difference between B2B and B2C

Products are sold from one firm to another in B2B, while they are delivered from firms to consumers (end users) in B2C. B2B transactions are generally in higher volume and less likely to be done in cash. In B2B, trust must be obtained between parties since firms' cash flow might be seriously affected negatively if there are large debts due to non-paying customers (Straub, 2002:14).

Table 2 below explains characteristics and behaviors of consumer and organizational buying. For instance, order sizes are in large amount in organizational buying while they are in small amount in consumer buying. The level of risks and the complexity of decisions are low in B2C compared to that of B2B markets. Purchasing takes shorter time in B2C whereas it is longer in B2B. That means, buying processes are longer in B2B activities because multiple people should interact each other before making a decision. B2B markets are privileged to a higher level of lifetime value to a company while maintaining a sustainable long term relations (Lazarus, 2006:2).

Table 2: Broad Difference between B2B and B2C Buying Behaviors

Abbildung in dieser Leseprobe nicht enthalten

Source: Organizational Buying Behavior. accessed from http:// www. oup. com / uk / orc / bin / 9780199551682 / ellis_ch02.pdf on 15.03.2012.

Figure 7 below shows the relationship between B2B and B2C. Both e-business processes intersect on retailer and consumer after the goods are delivered from the distributor. B2C is one step further than B2B. Otherwise the process is all the same shown in the figure till the goods are delivered to the retailer.

Figure 7: The Relationship between B2B and B2C

Abbildung in dieser Leseprobe nicht enthalten

1.5.3. Consumer to Consumer (C2C)

C2C occurs when consumers sell products/services to other consumers. It's a person to person transaction which takes place since 1995. C2C provides consumers to advertise and sell their products to other consumers online. It is essential for both the seller and the buyer to register to the auction site. While the seller needs to pay a fixed amount of fee to the online auction houses to sell their products, the buyer only can bid without paying any fee. C2C websites bring buyers and sellers to conduct a business.

C2C facilitates transactions between customers through a third party. C2C transactions were emerged by the establishment of ebay.com. eBay is a good example for C2C, an e-commerce type of auctions website where consumers can buy and sell using online payments such as PayPal (Lee, 2010:351). Some other examples of auction websites are uBid.com and overstock.com. In Turkey, sahibinden.com and gittigidiyor.com can be categorized as C2C websites.

Figure 8 below shows the C2C business model.

Figure 8: C2C Model

Abbildung in dieser Leseprobe nicht enthalten

Source: E-commerce Models. Accessed from http:// www. eservglobal . com / uploads / files / index.pdf, on 10.03.2012.

1.6. ADVANTAGES AND DISADVANTAGES OF ONLINE MARKETING FOR FIRMS

While online marketing provides some opportunities, it has some disadvantages, too.

1.6.1. Advantages

E-commerce brings some advantages to enterprises such as expanding overseas, decreasing costs, sustaining well-developed customer satisfaction, reaching many suppliers, easy market penetration, product/service diversification, and increase in level of quality.

A retailer can link his/her physical stores through the website. It is not necessary to sell his/her product or service via web. However, owning a website surely brings lots of advantages for those organizations. Websites provide information about why, how and when to access this retailer's store. They include mapping/driving directions to the store, information about the background history of a company, operation hours, announcements and special events, coupons, gifts, locations (other branches). Internet allows to display products/services for traditional retailers, help to sustain a strong and long customer relationships, business processes and distribution systems (Zerega, 1999).

Customization is the easiest to see in action: it allows the visitor to select and set up their specific preferences. Firms try to catch up individuals' patterns of shopping behaviors and understand what types of products/services those people prefer. According to the needs and wants, those customers receive specific contents through their login and password choices (Chaffey and Smith, 2008:376).

According to Pine and Gilmore (1999:10), the customization is defined as ''producing in response to a particular customers need' (Hsieh, 2011: 10). By customization, customer's perceived value of a product can be increased compared to a mass product. Online firms don’t only sell different products to different customer segments. They also provide product offerings individually such as some firms allow customers to configure their own products (e.g., Dell Inc.). Firms can deepen their customer relationships along with personalization and customization process so that; customer loyalty will increase (Hou and Rego, 2002: 13-14).

1.6.2. Disadvantages

Firm owners might face with some difficulties such as building a website to publish their goods or services. When a producer or intermediary doesn't know more about publishing a website, it is necessary to hire a third party for making a website and selling the products or services via this website. Otherwise, the firm owner would not be on the right track.

It is much easier to market offline towards customers, because gestures can be used to influence people. However, on an online platform, it is more difficult to influence people. In order to attract people for buying merchandise or services, online retailers should find new ways of marketing techniques such as advertising coupons, sending e-mails about their newly published products/services to their mailboxes, get ranked on major search engines such as google and interact with visitors often.

Online shopping may not be an appropriate way if a product would be purchased by only touching or feeling to judge its quality or it costs a lot because of logistics. In this respect, firms experience their websites only to display and advertise their products/services (Adelaar and Liu, 2005). In a category of brick and mortar firms, some products/services must be produced and consumed locally while others such as large appliances would be more costly to transport. Conversely, it's possible to produce and deliver many products/services physically and electronically (Steinfield et al. 1999).

1.7. ADVANTAGES AND DISADVANTAGES FOR CUSTOMERS

Product, place, price and promotion which differentiate a product from its competitors are described as marketing mix (four Ps). They are as relevant to online businesses as offline ones, but e-commerce leads to some new issues and perspectives in the marketing mix. According to Chen (2005), e-commerce technologies provide new products/services, new placing options and new pricing strategies. The most important impact is on promotion. The new effect of internet enables marketers to focus on customer satisfaction and retention, customer service and relationship marketing (Constantinides, 2002:59).

1.7.1.Product

Product exchange can occur through either B2B, B2C or C2C online. Products should be published on websites to be purchased. Influential websites attract people to come to see the offers and see them in detail. It's crucial to spend money, time and effort in order to describe and publish products/services to end-users or intermediaries. The other important thing is to persuade others to purchase products/services. There are lots of ways to attract people and convince them to prefer products/services offered online such as advertisements on social media, blogs or forums, etc.

Product characteristics play a vital role in online marketing. Some consumers find new forms more satisfying while others prefer products in their original forms. (Kleindle and Burrow, 2005). For example; nowadays the number of e-books, e-tickets, digital photos, online bill paying are increasing. Products are intangible while being sold online. The intangibility causes the product not to be touched or felt. In order to reduce the intangibility, firms should create strong and reliable positive brands (Lee, 2003:303). For example; purchasing a cloth may cause some problems about fitting. In order to prevent this, companies need to integrate a software program into their websites. That way, customers will comfortably purchase those clothes which they can try online and see how they look on them before purchasing online . By the help of this new technology, the risk will be reduced and the number of sales would increase (Mardesich, 1999).

Dell is a commonly known example. People can access to its website and build a laptop or a desktop with desired functions and features. Besides this, Dell also supplies user guides, packaging, warranty and after sales services. Dell users will go online and download new updated drivers through producers' websites. Through internet, the company collects customers' feedback quickly so that new products would be improved in a shorter time (Linh and Tung, 2008: 10-11).

Internet gives an opportunity both for small and medium size enterprises (SMEs) and large companies to market their products/services online. Therefore, internet enables companies at different sizes to compete on the virtual environment.

1.7.2. Price

Online marketing allows to cut some extra costs such as storage costs; so that price of the products are much more cheaper than the price of the products sold in a traditional way. This process eventually helps retailers to increase their profits (Torlak, 2006:2).

Bailey (1998a, 1998b) compared the price levels for a set of books, CDs, and software in both physical and internet markets in 1996 and 1997. In this period, he found higher prices on internet than physical stores. His hypothesis is caused because of a lack of competition in internet markets at that time. After Barnesandnoble.com entered into the internet market in march 1997, Bailey observed that this entry undercut Amazon.com' s prices by 10 %. After than, Amazon quickly started to match its prices during the following months. In a later study, Brynjolfsson and Smith (2000) found that prices were lower on the internet than in physical stores in 1998 and 1999 (Clay, et.al., 2001:3).

Besides, internet facilitates price comparison from the point of customers. Price is an important factor to be careful about before purchasing a product/service. Since the internet has developed a lot, price comparison websites started to emerge. Customers would prefer to search a product from price comparison websites rather than surfing more than one website, because it's possible to look for a price of a single product. So, the number of price comparison websites is increasing day by day. Some examples of price comparison websites are www.pricegrabber.com, www.hizlial.com, and www.akakce.com. Buyers directly focus on prices when they are searching. Buyers can easily filter prices from lowest to highest or vice a versa. Online marketing facilitates price competition by allowing consumers to get more information about the cost and price of each product (Kromidha and Krypotou, 2004).

1.7.3. Place

Internet has been changing individuals' shopping habits. When the process is evaluated from a traditional perspective, people used to shop in stores rather than from an online store.

The world is getting smaller by technology. Now, everyone who accesses to internet can shop online by their credit cards at anytime and anywhere. It's possible to find most valuable and known brands online (Odabaşı and Odabaşı, 2010: 55). For example, a lady who surfs on the internet suddenly faces with an advertisement. This advertisement attracts her attention by flashing ''Only 99,99$ for a pair of branded new high heeled shoes ''. Even if she actually doesn't need any shoes, she might be attracted by the discount given in the advertisement. She hasn't planned to buy, it is an impulsive action. So, this lady doesn't go to a shoe store to buy a new pair of shoes, but she rather prefers to shop online.

It's also not necessary for a company to acquire or rent an office. Instead of paying lots of money for a building or an office, it will be much better to build a website and publish products/services. Therefore, internet provides cost savings for the companies.

1.7.4. Promotion

Promotion is a marketing communication tool which attempts to influence customers about buying products/ services. Getting in front of the target audience in an effective way plays a vital role in online marketing. Especially in this highly technologically developed environment, firms are competing brutally in both online and offline environment. There are various ways of promoting products/services such as through search engines, social media, blogs, etc.

The internet which can reach numerous audiences is differed from other mass media communication tools regarding its interactive and multimedia features. People can be interacted personally so that the messages are directed to a specific individual with a high degree of flexibility. The internet is similar to television, but it includes more information capability. The aim of online communication is not solely to advertise a product. It also creates trust in the customer by sustaining a good relationship (Dominici, 2009: 20).

Retailers and manufacturers have an advantage while they are promoting their products/services on the internet. Evans and Wurster (1999) stated some advantages of the internet as a promotion tool and claimed that the internet allows richness of information to customers. It gives an opportunity to link the end user (customers) to manufacturers at a low cost. Manufacturers or retailers can easily collect data about customers and build their own customer database and profiles to offer them promotions (Allen and Fjermestad, 2001: 18).

CHAPTER 2 . ONLINE SHOPPERS AND GENERATIONS AS A FACTOR AFFECTING ONLINE CONSUMPTION BEHAVIOR

2.1. GROWTH OF CONSUMERS' SHOPPING ONLINE

Globalization of the world economy has changed the way of consumption. Liberalization of the economy and the rising level of product or service variability enable consumers to find more choices to purchase and encourage them to shop as if they don't have a specific need. At that time, before 1960s the credit cards weren't used in Turkey even around the world. The first credit card (American Express) was used in USA in 1958 (http://www.ekodialog.com/kredi-karti-piyasasi/kredi-kartlari-tarihsel-gelisimi.html). After Turkey has changed its economical strategy from import substitution to export led growth, the product or service variability suddenly emerged to increase. According to technological improvements and new developments, production has increased. Since the usage of credit cards is increased, people started to shop although didn't have money in their pockets.

People were used to shop from stores in shopping malls or any other convenience stores. Since the online shopping websites emerged, especially B2C websites such as markafoni.com or trendyol.com, people could easily shop online by using their virtual credit cards safely without getting tired or losing time. So, it is a convenience for them.

Globalization released to provide more opportunities for consumers. Consumers are now able to reach information about the products or services through the internet, so that they could easily judge and decide whether to purchase or not. Especially online blogs enable people to discuss and learn feedback of the previous users of a product or a service (Bayraktaroğlu, 2009: 442). These developments force companies to gather feedback from customers and develop or adopt their strategies.

Nowadays, price is not at the forefront. Time restrictions, convenience and the quality plays a vital role rather than the price. Online shopping also confuses consumers' minds. Since the product varieties are increasing day by day, people are confused or having a hard time to make a purchase decision. People are canalized into cheaper and qualified products. A lot of technological firms, airlines, restaurants, cosmetics, etc. are competing and fighting with each other on behalf of prices (Bayraktaroğlu, 2009: 450). For example; gittigidiyor.com daily publishes discounted products for a specific period of time, many coupons are delivered by online websites to consumers in order to spend such as groupon.com.

[...]

• College: İzmir University of Economics
• Course: Online consumer behavior
• Grade: 4
• Author: Mert Aktan (Author)
• Publication Year: 2019
• Pages: 116
• Catalog Number: V509843
• ISBN (eBook): 9783346090003
• ISBN (Book): 9783346090010
• Language: English
• Tags: analysis, online, consumer, behavior, between, different, generations