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The key factors influencing consumer decision-making in online purchasing, focusing on product and merchant issues. It also discusses methods for getting to know customers and using their information for personalization in advertising.
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Highly competitive environment. Competitor only a click away. Once consumer has decided to buy, key questions:
If product we offer is unique,
If product is not unique, how will I get customers to buy from me?
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How will customer decide what to purchase and who to buy from?
Above 2 elements change
We can know general customer characteristics, but must supplement that with knowledge of our actualmust supplement that with knowledge of our actual and prospective customers.
How expensive is the product? Price not the only factor, but generally significant. Lowest price doesn’t always win. But if not lowest,
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How confident are they in the product?
Customer cannot physically touch product, so must convince them of quality at a distance. Can they assess alternatives and make a decision, or does site hamper them? Poor site design leads to customer frustration, and ultimately to lost sales.ultimately to lost sales.
Do they trust the retailer?
How comfortable is customer with Can customer easily see total and shipping alternatives? How can customer get help? Can customer contact us and get a reply? Timely? Immediately?y Is store focused on customer and relevant for his needs? Is there any type of personalization used?
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Electronic Commerce 2008 by Turban, Lee, King, McKay, and Marshall
What are we looking for? build a personal profile to explain and predict online buying behavior Learn about an individual customerLearn about an individual customer What products does he like? What styles/sizes/color/etc. does he purchase? What questions does he have? What else would be helpful for him to know? Look for trends on the wholeLook for trends on the whole Are particular product sales spiking? Which site pages are most typically visited? Not visited? Why?
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Customer registration allows us to identify their activities. Cookies—typically used for customer identification and tracking. Can be used to track known or anonymous user. Considered voluntary. Is it really?
Is my tracking of customer activity invading their privacy? Do I have a right to… make a record of all customer activity on my site? use that information to build an individualized customer profile? give that information to other companies I partner with?with? sell that information to others? publish it?
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compare user with others similar and make recommendations accordingly Competitive advantage from experience pre‐determined hypotheses about interests
What we know about our customer influences What we communicate to our customer Frequentlyq y throughg online advertisingg Advertising: promotional communication using mass media.
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May pay based on time (rare), number of views (CPM), number of clicks (click‐thru), or variations (pay per lead, pay per sale, etc.). Banner swapping—two companies agree to display each other’s banners. Banner exchanges—multi‐company system of bartering banner ad displays and placement. Measuring effectiveness:Measuring effectiveness: —ratio of number of times an ad is clicked vs. number of times it is displayed.
—ad interrupts navigation and requires user to dismiss ad to continue. “Forced” ad Often used when user is downloading content ‐advertising based in games the user plays. Email advertising‐‐solicited (“Opt in” lists) ‐‐word of mouth marketing byword‐of‐mouth marketing by customers, often in social networking sites.
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Novelty of web is wearing off. Businesses looking hard at data. Have to draw people to our site for it to be effective. (Use traditional advertising)traditional advertising) Quality of presentation hard to control—medium not “fixed” in presentation like most (vs. TV, magazines, etc.) (Flash, Javascript, etc.) Virtual community nature of web may allow us to invent new types of “advertising” Customer contributed product reviews Customer oriented suggestions, groupings, etc. Feedback can be much more distributed
