Comparing Consumer Purchase Behavior on the Internet and in Brick-and-Mortar Stores

A research area that has gained interest of marketing researchers in recent years is the comparison of consumer behavior on the Internet and traditional brick-and-mortar stores. We offer an overview of the recent developments in this research area and summarize the key findings along two dimensions: 1) factors that may cause behavioral differences in the two types of shopping environments; and 2) patterns of behavioral differences identified in the literature. We also outline our own recent work as an example to illustrate how this stream of research can help improve marketing strategies and tactics on the Internet. Directions for future research are discussed in the last section.

Exploring Consumers' Willingness to Contribute to Internet Web Sites

One of the most interesting opportunities when introducing e-commerce in producer consumer networks is that the new information technology structure may be used to empower consumers to be more active participants in the economic value creation process (e.g., Hoffman and Novak, 1996; Alba et al., 1997). Consumers may for example create their own personalized version of a Web site or services, or communicate with other consumers about products they have bought. Many Internet-based firms have recognized the potential benefits of these opportunities and are encouraging consumers to make contributions to their Web sites. Some examples of Web sites encouraging various types of consumer contributions are presented in Table 1. Allowing consumers to contribute more actively to different stages of the supply chain can create three main types of economic benefits. First, consumers can assist producers in achieving lower production costs and creating higher consumption utility for the consumer’s own benefit (e.g., by lowering transaction costs or by allowing producers to make more customized products). Secondly, they can also assist producers in generating similar benefits for other consumers. Thirdly, the Internet can be a vehicle through which consumers can generate additional value for each other, directly and without business intermediation (e.g., by providing suggestions for new product designs or by sharing information about past consumption experiences).

Satisfaction, Frustration, and Delight

This research project develops a framework for understanding how consumers interact with Web sites on the Internet. Our goal is to understand the interaction of individuals and Web sites from the perspective of the marketer, or third-party, who has created the site. Internet technology enables marketers to customize their interaction with consumers in order to better meet consumer needs. We are interested in whether and how this works. Our framework builds on four interdependent elements: first, the individual Internet user’s mindset as he/she enters a particular Web site, which includes, importantly, the user’s expectations; second, the Web site itself (consisting of four components: structure, content, connectivity, and malleability); third, the individual/Web site interaction; and fourth, the user’s evaluation of the Web site, which affects behavior.

Factors Influencing Marketing Performance on the Web

Despite the current development of Internet marketing, understanding the effective use of the Internet still poses problems for academic researchers and marketers (Kassaye, 1999). This research attempts to empirically explore some aspects of the factors influencing commercial company Internet and Web development. The key factors considered for company Internet and Web site development are technology capacity, the use of different developers, company on-line measurement patterns and marketing executives’ Web site knowledge. As a result of a cross-sectional comparative study of ‘effective’ and ‘ineffective’ companies, the findings indicate that companies with better performance from Web sites tend to possess higher technological capabilities for Internet-based marketing. It seems that their marketing executives have more knowledge of technical aspects of Web site development. They tend to be early Internet adopters using a multiple approach to measure their on-line performance. These results help to improve general understanding of company effectiveness in developing on-line marketing strategies.

Leveraging Online Information to Build Customer Relationships

Collecting and analyzing the available information about customers is at the core of building customer relationships. This chapter categorizes potential sources of online customer information and presents examples for their utilization in an Internet business context. Methods to gather and analyze customer preferences and expectations as well as to visualize the actual behavior of Web Information Systems users are identified and categorized according to information source. In analogy to customer tracking in traditional retailing outlets, the chapter demonstrates the need to capture and visualize how users approach and navigate through Web Information Systems in order to maximize the customer delivered value in global electronic commerce.

Beyond CPMs and Clickthroughs

Measuring effectiveness of online ads is of critical importance to the survival of the Web as an advertiser-supported medium. Present efforts in measuring performance of Web ads are concentrated on adapting measures used in traditional media to the online medium. However these measures do not take into account the unique interactive characteristics of the medium and the differences in how consumers process advertising stimuli on the Web. Further, ad processing and performance measurement capabilities differ across various advertising formats on the Web. This research proposes a framework to investigate how consumers interact with different advertising formats on the Web and identify metrics that reflect how effectively the ad is processed.

Online Marketing Strategies in the Information Economy

On-line marketers are fast pushing the boundaries of the field through a combination of creative content, the use of in-depth market knowledge, and the deployment of interactive and analytical technological tools. Targeted on-line marketing has emerged as a viable form of reaching customers on the Internet. In addition to providing a cheap and effective way of reaching qualified and interested end customers, it offers several other advantages in the way marketers can establish long-term customer relationships, leading ultimately to retention and loyalty. In this paper, we offer an introduction to the phenomenon and describe typical business models for targeted marketing online. We do this through a comparative case analysis of Netcentives, Inc., a leading integrator of interactive media technology; Agency.com, a leading interactive media agency and NetPerceptions, Inc., a provider of collaborative filtering software. We then outline some of the challenges and opportunities in this new medium going forward, including issues related to consumer privacy and the changing nature of intellectual property.

4I

New technologies require new paradigms and a fresh perspective in analyzing and comprehending their implications. Computer networks, the Internet and the World Wide Web (WWW) in particular have already revolutionized many business practices. The satisfactory application of traditional marketing models to the analysis of online marketing practices is difficult at best. Thus, this chapter offers a new and an intuitive conceptual framework for analyzing, interpreting and managing the marketing process in a connected world. Specifically, we propose a model consisting of four crucial aspects: Intensity, Integration, Interaction, and Identification (4I). Each of these four aspects should be carefully analyzed according to prespecified guidelines to ensure the success of any on-line business. The chapter describes characteristics that will be intrinsic to marketing in the future connected world. We investigate the reasons underlying these characteristics. We suggest a detailed procedure for managing these future attributes using the 4I model. In the process of doing so, we also compare and contrast our model to traditional marketing models and demonstrate its superiority.

Investigating Social Motivations for Internet Use

The uses and gratifications theoretical framework has continued to prove useful in the study of new and emerging media. This chapter utilizes the uses and gratifications perspective to better understand the factors motivating commercial Web site use. Through the cooperation of two major on-line companies, this research reports the results of a two-part study that begins with the identification of 179 motivations for Web use and subsequently reduces those to five primary underlying factors. These factors are discussed and related to three key indicators: frequency of Web use, frequency of computer use, and affinity with the computer. Implications for a third general media gratification beyond the basic gratifications of content and process are discussed, and directions for future research are proposed.

The Evolution of Web Marketing Practice

This chapter reviews the current state of Web marketing practice and presents a framework on the relationships among Web technology capabilities, marketing approach and customer orientation. We present a discussion of how Web technology capabilities — such as data, network reach, traceable traffic, portability, interactivity, and high-bandwidth transmission — enable different marketing approaches – specifically, matching, branding, customer experience, and viral marketing. The viability of these approaches is determined by how well they match the orientations of target customers – be it recreational, experiential, convenience, or economic. Propositions regarding the interaction between current practices and shopper orientations are presented as a basis for determining effective Web marketing practices.