Determinants that influence a consumers

behavior to shop online

Dissertation Research Proposal
Dissertation supervisor- Dr. Reza Salehnejad

BMAN 70302
(Research Methods and Data Analysis)

Semester 2
(2013-2014)
Student Id- 9245462

Keywords- Online stores, Factors affecting the buying decision, Consumer Behavior,
e-Marketing strategies, Buzz marketing

Transforming a brand into a socially responsible leader doesn't happen overnight by

simply writing new marketing and advertising strategies. It takes effort to identify a
vision that your customers will find credible and aligned with their values.
Simon Mainwaring

Introduction
Throughout the most recent two decades, the fast dissemination of workstation and
data technologies all around the business and buyer groups has brought about
dramatic progressions. Internet has slowly penetrated every business industry and has
provided people with the vast information about education, entertainment etc. Internet
has predominantly taken over the way people used to shop. The traditional method of
shopping has reduced considerably after the evolution of Internet. The consumers
using online stores have been increasing daily. Not only is the number of consumers
growing but with it the size and amount of their purchases has also increased
drastically. From daily groceries to apparels, electronics etc. everything is now
available on the net and is delivered to us within no time. Due to the industries fast
pace, any company that did not keep up with the innovation of entering into online
stores fell behind the curve. Because of this, the companies started investing in
research and development to adapt and survive in the ever-changing environment. As
the e-commerce took pace it posed a strategic threat for the brick-and-mortar sellers
as in the case of Amazon which is now the largest online book shop has reduced the
sales of Barnes and Noble and eventually B&Ns markets diminished. Entry of
Amazon into the bookselling market via Internet changed the structure of the market
(Lieber and Syverson, 2011).
Online shopping has not only made shopping easier but has also positively affected
the economy. The e-commerce sales of US in 2013 reached $263.3 billion, an increase
of 16.9% from 2012 (US census bureau, 2013). While these figures illustrate a huge
amount of people shop online the reason for there online shopping habit is not clear
and it raises an issue of investigating the dynamics that drive them to shop online so
frequently.

There are several factors that persuade an individuals decision to purchase either
online or offline. This research looks in to the factors, which affect a consumers
decision to purchase goods online. Some of the factors are - age, income, nationality,
ease of using the net, usefulness of the product etc. There are some exogenous factors
that also affect a consumers buying decision, which are as follows- personal
interaction, need for special items, product characteristics etc.
As the online shopping is gaining momentum and many people among various age
groups and income groups are opting for it, I developed an interest in gaining an
insight as to what motivates them to stop using the traditional method of shopping and
start shopping online. What are the factors that affect their buying decision? How do
the online stores market their products so that the consumers get attracted to shop
online?
Research Question and Objectives
The objectives and the research problem that I wish to target are mentioned in this
section. This section also contains the tentative hypotheses.
R1. When do potential buyers decide to purchase online? Assuming that the
consumers have decided what are the factors that affect their buying decision?
A1. Consumers like to surf the net for products they like. At times there are products
that they like and wish to buy but they remove the product from their cart. This
decision varies from person to person depending on the factors like price of the
product, doubt in quality of the goods, delivery time issues, finding the price a bit
higher than the actual worth of the product, having queries regarding the supplier or
online store or even waiting for a sale or prices to go down etc. Sometimes the
consumer might abort the purchase online and buy the product from a land- based
store. Therefore it is difficult to say that a consumer who adds a product to the cart
would definitely buy it.
Hypothesis 1- Many times consumers tend to abandon the product they add to
cart; there are a few factors that affect their decision whether to purchase the
good or not.
R2. How do demographic factors of a consumer affect the buying decision?

A2. Shopping is an entertainment for some and for others it is done to purchase
necessary products. Buying for entertainment depends on various demographic factors
i.e. age, income, education and gender. Old age people shop online for necessary
goods whereas for teenagers shopping is an entertainment. They mostly search for
apparels, electronics, movie tickets, accessories etc. and tend to purchase them that
moment only whereas aged people would think before making a buying decision and
would prefer shopping traditionally from a nearby store. So age does play a major role
in the buying decision. Education is directly related to online shopping. People who
are educated would be the only ones who would be able to use internet and
understand the information provided by the online stores regarding their products and
other offers. The income also plays an important part in buying decision because
every individual has different spending capacity and cannot afford many products
shown online. Females tend to shop more frequently online than the males. Women
have a tendency to surf the net more often for their favorite brands and products
whereas men prefer to shop in physically present stores than online.
Hypothesis 2- Demographic Factors play an important role in online buying
behavior pattern of consumers.
R3. What external factors affect a consumers decision to purchase online?
A3. Despite of motivation and willingness to buy a product consumers do not buy the
product due to the external factors surrounding them. Some of these factors are- selfefficacy, need for personal interaction, time pressure, attractive alternatives etc. Selfefficacy refers to the belief that an individual has the ability to use the resources for a
specific task; here it is the ability to use the internet and understand the method of
online shopping. Few people feel satisfied only with personal interaction to an
employee or a store staff to help them find or give them information about the
product, which is missing during online shopping. There are various alternatives
present in the both markets, which makes it difficult for a consumer to select and buy
the product.
Hypothesis 3- External Factors affect a consumers purchasing decision.
R4. How do online stores attract customers to shop online? How does buzz marketing
help in the online sales of a product or brand?

A4. To compete in the technically advanced world where are there are so many online
stores like eBay, Amazon, Flipkart etc. marketing is a necessity to survive. Online
marketing like pop ads, social networking sites, emails, side ads on the window are
used to attract consumers. These ads are creative with animation and music which
fascinate the customers to open the website and shop online. Buzz marketing is
another form of marketing that has led to the development of online stores.
Suggestions by friends, family members and close ones about the products and brands
attract a consumer to shop online. Hence, consumers tend to sometimes purchase
goods that they don't really want.
Hypothesis 4- Buzz marketing and online advertisement attracts an individual to
purchase goods online.
R5. Does privacy and security of information affect a consumers decision?
A5. Online privacy and security of information being provided by the customer is an
important factor in online shopping which the stores need to take care of. As the
customers provide their personal information like their names, addresses, telephone
numbers, card details, email ids etc. the stores need to be cautious about the
information provided to them. If the online store website is not secured then it could
easily be hacked and create problem for the customers. If the stores are not secure
people would not shop and this could be a problem for the online stores. Therefore the
stores need to be careful and secure with the information they have.
Hypothesis 5- Privacy and security of the customer information needs to be
taken care of to build a strong customer base.
Literature review
Online shopping is a broadly defined activity that includes searching online retailers,
products, product information, selecting payment options and communicating with
other consumers and retailers as well as purchasing products or services (Cai and
Cude, 2008). Consumer behavior according to the American marketing association is
a dynamic interaction process between perception, emotion, cognitive, behaviors and
environmental factors, which are the base to fulfill the functions of the exchange (Yan
and Dai, 2009).
There are various advantages for consumers that encourage them to shop online. A
few advantages are access to more information with the help various search engines,

exploring various tools on the net, buying products without the limit of space and time
etc. The consumers can compare the products and the prices before buying them,
giving them a better and cheaper option (Yan and Dai, 2009). The consumers can read
the reviews given by other consumers about the product and the online store, which
would help them to decided whether they wish to buy the product or not. Similarly
there are advantages for the online stores as well. These advantages are based on the
feedback that the customers provide to the online companies after they make their
purchase. A few advantages are that can get a better marketing objective with better
designed marketing strategies, creative websites to attract customers can be
developed, they can add the products and increase their product base according to the
needs of the customer.
A research done by Forrester Research Technological survey (2005) showed that
internet users are people with higher-income, are more educated and younger. People
with income above $50000 annually are more likely to shop online than the people
with annual income of $20000. Consumers who have college degree shop online more
often than the consumers who have just graduated from the high school and finally the
tendency to shop online goes down with the increase in age (Lieber and Syverson,
2011).
The other factors according to Yan and Dai (2009) that affect a consumers buying
decision are online shopping experience, degree of product knowledge or
understanding, degree of involvement on the internet, sellers reputation and
credibility, information reliability of the product, price level of the product, website
business security and convenience of transaction on the website. A consumers
shopping experience can affect his future purchasing decision because it could
sometimes be a task to purchase products online due to the complexity of the website.
The understanding of the website depends on an individuals use of the internet. The
more often one uses the internet for online shopping it is easier for him to understand
the websites and search for the products he desires. The website should provide
correct and full information about the product because if the site lacks information the
chances of the consumer leaving the product increases. A consumer before purchasing
checks two or three website for the information of the product as some products like
electronics require proper knowledge before making a purchase. The decision of
buying the product also depends on the reputation of the seller depending on the
quality, price, delivery and authenticity of the product. The last factor that the authors

have discussed is the convenience of making a transaction while purchasing. If the

transaction being made is secure and easy then the consumers don't have to go
through the tedious process of filling the information and they are also sure about the
safety of the information they provide.
Amazon is one of the most successful online firms and as of today the market value of
the company is $119 billion, which is higher than the two large successful offline
retailers, Target and Kohls. Online retailers enjoy many benefits like low inventory,
reduced overhead and low distribution costs. Searching a product over the net is much
more easier than searching it physically in the land based stores. There are a few
brand and products that we might have not been aware about if the internet was not
there. The decision made by firms like Amazon and eBay and the consumers
responses towards the online stores and shopping preferences changed the structure of
the market completely. Online stores provide more variety of products, with various
colour options and price range, which we do not get in the land- based stores. Online
stores reduce the searching cost of customers and make it easier for the consumers to
compare the products before purchasing. Online stores also provide a customer with
return and refund policy if they don't like the product or there is some problem with
the size or the product. But there are some services or products that need to be be sold
personally and cannot be sold online. A few of them are services like dentistry,
plumbing etc. and goods like gasoline and food which have to consumed as soon they
are made etc. There is time difference between purchasing and consuming, which act
as a negative point for a consumer to purchase online (Lieber and Syverson, 2011).
The marketing strategies of online stores should be creative and attractive so that it
fascinates the customer to enter the website. The ads should use animation, graphics,
and sound and it should also display any special offer that the online store might be
providing. The methods of marketing used by theses stores are as follows pop-up
advertising, online coupons, side-panel ads, emails with special offers etc. (Smith, 201
(Cambridge Dictionary)0). One of the upcoming and new marketing method is buzz
marketing. Buzz marketing is basically a method of selling a product by getting
people to talk about it with other people, particularly over the internet (Cambridge
Dictionary)
Security and privacy of the data provided also plays as a major role for the customer
to decide whether to buy the product or not. The data provided need to confidential
with the company online and should not be used in any ill manner. The security is

related to the online payments being made by the customers. The customers need to
feel secure while using their credit cards and for this the online companies should
have a powerful server with the best safety measures installed in it. If the website is
not safe then it could create problems for the customers and indirectly for the
company. Hence the website should be secured (Riquelme and Roman, 2013).
Research methodology
This research aims to understand the determinants that influence a consumers
decision to buy online or not. There are various internal and external factors that
affect the buying decision of a consumer whether it is online or offline, but there are
various certain factors that motivate the consumers to shop online. To meet this
objective the research would be conducted over two stages. First would be primary
data collection, which would be done by developing an online questionnaire keeping
in the mind the different demographic factors of the people. The data would then be
analyzed statistically. A quantitative method would be used over qualitative approach,
as the primary research would only involve analyzing of questionnaires rather than
taking interviews. This would help to scientifically quantify the findings of the study
and validate the results accurately. The sample would be chosen from a population to
accomplish the highest accuracy of results from the selected sample size. The sample
would be chosen considering all the demographic factors i.e. age, income level,
education, nationality etc.
The second would be reviewing the past literature and the empirical evidences. The
research here would be deductive as the theories, design, findings, data collection and
data analysis would be used from the previous literature and a reasonable conclusion
would be formed. The past research helped me in the development of the hypotheses
for this research. But there are some gaps in the past literature, which have been taken
into consideration in this research. Logical reasoning and empirical evidences would
be used throughout the research to come to a conclusion. Inductive approach would be
used in most of the research as an intense research on the past literature has been used
to develop the research questions.

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Required Activities
Background Reading
Literature Review
Primary Data
Secondary Data
Collecting Data
Analyzing Data
Writing Data Analysis
Preparing Background Information
Writing Research Methodology
Writing Discussion
Revision
Binding and Submission
Completing 1st Draft

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References
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accessed on- 27th April 2014
Dictionary.cambridge.org, (2014) Cambridge Dictionaries Online. (Available at:
http://dictionary.cambridge.org/dictionary/business-english/buzz-marketing) last
accessed on-28 Apr. 2014
Kukar-Kinney, M. and Close, A. (2007). The determinants of consumers online
shopping cart abandonment. (Available at- http://papers.ssrn.com/sol3/papers.cfm?
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Lieber, E. and Syverson, C. (2011). Online vs. offline competition (Available athttp://faculty.chicagobooth.edu/chad.syverson/research/onlinevsoffline.pdf) last
accessed on 25th April 2014
Riquelme, I. and Rom\'an, S. (2013). Is the influence of privacy and security on online
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on- 28th April 2014
Smith, K. (2011). Digital marketing strategies that Millennials find appealing,
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abstract_id=1692443) last accessed on- 27th April 2014
Varadarajan, R. (2011). Marketing strategy: discerning the relative influence of
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