DISSERTATION PROJECT REPORT

ON
“A STUDY ON CONSUMER BHEAVIOUR TOWARDS ONLINE
SHOPPING ”

“Submitted in the Partial Fulfillment for the Requirement

of Post Graduate Diploma in Management”

(PGDM)

Submitted to: Submitted By:

Internal Guide: Name: JOSHMY J
Ms.KOMAL KHATTER Roll No.: 90
(Assistant Professor) Batch: 2018- 20

Jagannath International Management School

Kalkaji, New Delhi

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 DECLARATION

I, JOSHMY JOSEPH, do hereby declare that the Dissertation Report entitled “A Study
on Consumer Behavior towards Online Shopping” submitted to Jagannath
International Management School, Kalkaji in partial fulfillment for the award of
Diploma of Post Graduate diploma in Management is an original piece of research work
carried out by me under the guidance and supervision of Ms.komal khatter.

I further declare the information has been collected from genuine and authentic sources
and I have not submitted this project report to this or any other university for award of
diploma or degree of certificate examination.

Date: JOSHMY JOSEPH

Place:

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 ACKNOWLEDGEMENT

I wish to express my heartfelt gratitude to all the people who have played a crucial role
in research of this project, without their active cooperation and support the preparation
of this project could not have been completed within the specified time limit. I am
thankful to my Internal Mentor, Ms. KOMAL KHATTER (Assistant Professor) JIMS,
Kalkaji for motivating me to complete this project with complete focus and attention.

I would like to extend my gratitude to Dr. J K Batra (Director) Jagannath International

Management School for arranging the Dissertation Project in a good schedule.

I also acknowledge with a deep sense of reverence, my gratitude towards my parent

who have always supported me morally in completion of my project. At lat but not least,
appreciation to all my friends who directly or indirectly helped me to complete this
project report.

JOSHMY JOSEPH

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 CONTENTS

TITLE Page No.

Executive Summary 5

Chapter 1- Introduction to the topic 6-7

Chapter 2- Consumer characteristics 8-21

1. Online consumer characterstics
2. Important influencing factors

Chapter 3- Research Methodology and Objectives 22-24

Chapter 4- Analysis and Data Interpretation 25-43

Chapter 5-LIMITATIONS 44

Chapter 6- Appendix 45-50

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 EXECUTIVE SUMMARY

At any given time there are millions of people online and each of them is a potential customer for a
company providing online sales. Due to the rapid development of the technologies surrounding the
Internet, accompany that is interested in selling products from its website will constantly have to search
for an edge in the fierce competition. Since there are so many potential consumers, it is of the out most
importance to be able to understand what the consumer wants and needs.

The importance of analysing and identifying factors that influence the consumer when he or she decides
to purchase on the Internet is vital. Since the Internet is a new medium for there have been new demands
set by the consumer. That is why it is crucial for the online retailers to know what influences the online
consumer.

Analysing consumer behaviour is not a new phenomenon. The renowned marketing expert Philip Kotler
has published several works on the topic of consumer behaviour theories. These theories have been used
for many years not only to understand the consumer, but also create a marketing strategy that will attract
the consumer efficiently. Hence, understanding and identifying the consumer is closely related to the
directions a company will take with their marketing strategy. These theories can also be applied to
identify the online consumer and to create certain consumer segments. However, some distinctions must
still be made when considering traditional consumer behaviour and online consumer behaviour.

Since online retailing is a new retailing medium and online consumer behaviour is diverse from
traditional consumer behaviour, one must identify what influences the online consumer. Analysing the
process that the online consumer goes through when deciding and making a purchase over the Internet ,
shows some factors that consumers consider. These factors need to be identified and taken into account
by online retailers in order to satisfy consumer demands and compete in the online market. To further
understand how these factors influence different types of consumers, I must identify segments which will
enable us to make comparisons.

The purpose of this research is primarily to identify and get insight in to what main factors the online
consumer takes into consideration when purchasing online. Further, I will investigate if any segments can
be established by identifying the consumers and how these segments relate to the identified factors. The
findings of this research will be outlined a simplications for online retailers in order to enhance their
consumer knowledge and increase their online marketing strategy effectiveness.

Since the rapid development of the Internet online shopping has become a new and widely used medium
for retailing. In order to understand the consumer the retailers need to know what influences the
consumer. That is what I want to accomplish with my research.

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 CHAPTER-1
INTRODUCTION

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 INTRODUCTION

This dissertation aims at finding factors that affect the online consumer’s buying behaviour. By reading
literature concerning consumer characteristics and online consumer characteristics I believe to find
implications for certain factors that are of importance for the online consumer.

The Internet is a worldwide accessible series of computer networks that transmit data by packet switching
using the standard I Internet Protocol. It is a "network of networks “that consists of millions of smaller
domestic, academic, business, and government networks, which together carry various information and
services, such a select, file transfer, the interlinked WebPages and other documents of the World Wide
Web. Originally the Internet was mainly used by academics, research scientists and students; however
that scenario has changed as commercial organizations have moved to incorporate the World Wide Web
into their promotional campaigns, and by offering the facility of online purchasing (Jobber&Fahy,2003).
The Internet has evolved into a worldwide accessible marketplace for information exchange and e-
commerce. The strategic importance to be available for consumers on the World Wide Web, with
information and services has become particularly relevant to firms.

The Internet can make it easier for companies to have information about their products or services
available to their customers or potential customers. A company can satisfy the consumers’ individual
need of information at a low cost in comparison to sending out product brochures for example. As the
user can choose information from websites, which implies that the information provider can achieve
better understanding of the user’s needs and wants by collecting data. On the other hand, the Internet is a
place with hardly any structure or rules: therefore, large efforts are needed in order to show the consumer
where a specific site is located, and what services are available on that site. Vesterby and Chabert (2001)
claim that companies with no physical presence must market themselves considerably, both online and
offline, for the consumer to remember their name.

Whether it is the traditional market or the online market, the marketer must understand the consumer and
how he makes his decisions and purchasing choices(Hollensen,2004), because the consumer is under a
constant flow of stimuli from the marketers advertisements. The marketer has the possibility to decide and
to control the output that will be forwarded to the consumers, but when the advertisement reaches the
consumer that control ends. The consumer then interprets the information that has been sent out in his
own way based on specific factors for every consumer. Therefore marketers have developed different
theories that can explain why consumers interpret information in a certain way, and there by understand
certain behaviours.

Donuthouand Garicia (1999) identify the online consumeras: older, make more money, convenience
seeker, innovative, impulsive, variety seeker, less risk aware, less brand and price conscious, and with a
more positive attitude towards advertising and direct marketing. Some of these characteristics are similar,
while others are the opposite.

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 CHAPTER -2
CONSUMER CHARACTERSITICS

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 1. Consumer Behaviour

Donal Rogan (2007) explains the relationship between consumer behaviour and marketing strategy. He
states that “strategy is about increasing the probability and frequency of buyer behaviour. Requirements
for succeeding in doing this are to know the customer and understand the consumer’s needs and wants.”

Chisnall (1995) points out that human needs and motives are inextricably linked and that the relationship
between them is so very close that it becomes difficult to identify the precise difference which may
characterize them. People may buy new coats because it protects them against the weather, but the irreal
underlying dominant need may be to follow the latest fashion trend. Buyers’ characteristics are important
theories from Kotler and Armstrong (2007) and it explains the way that the consumer interprets and
receives stimuli from advertisements. The decisions of consumers are influenced by a number of
individual characteristics that are linked to the consumer’s specific needs (Kotler & Armstrong, 2007).

1. Consumer Characteristics

Consumer characteristics are explained by: Cultural characteristics, Social characteristics, Personal
characteristics, and Psychological Characteristics. These characteristics are identified, by the marketer, in
order to identify the consumer and to be able to decide on the strategy to what kind of consumer to target.
Hence, these characteristics are used in order to segment the market and target specific consumer groups.

Cultural Characteristics

The Cultural Characteristics are recognized as the main influencer of consumer behaviour.
These characteristics are developed by three features under pinning consumer behaviour:
Culture, Subculture, and SocialClass.

Culture is mentioned as the most basic cause of a person’s wants and needs. Kotler and
Armstrong (2007) argues that human behaviour is mostly learned and that I are exposed to
different sets of values and beliefs from a young age, and that these values influence our
behaviour and decision making. Hence, these characteristics are interesting for marketers and
important indicators of certain consumer behaviour and taste.

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Subcultures are small group formations with a certain number of people that share values and
beliefs such as nationalities, religions or geographic regions. An identified subculture can serve
as an important and effective market segment which can be targeted.

Social Characteristics

The Social Characteristics are divided into three different categories, namely Reference Groups, Family
and Social Role and Status.

When a group has a direct influence it is called a Membership Group, for example: family, neighbours
and co-workers. Reference Groups are the groups to which the person often wants to be long to and to be
apart of but is not. These groups indirectly and directly form a person’s behaviour and attitudes. There are
three different ways by which these groups influence a person’s behaviour; they may expose a person to
new behaviours and lifestyles, influence a person’s attitudes and self-concepts and also create a pressure
of confirmation by Reference Groups. Another influence of importance is the opinion leader . An opinion
leader is a person that influences others to follow his believes and attitudes towards certain issues,
products or areas (Kotler& Armstrong,2007).

Family–Family members have a great influence on the buying behaviour. The involvement and influence
by different family members varies, both to which degree but also in what way. Therefore, it is important
for marketers to understand which role is played by whom in the family and direct the advertisement
towards the main influencing part of the family.

Roles and Status–Each person belongs to different types of groups and also plays different roles whilst
having different positions in the various groups. Roles are identified by Kotler and Armstrong (2007) as
what activities people are expected to perform from other members of the group.

Personal characteristics

These personal characteristics are categorized into: Age and Life-CycleStage, Occupation, Economic
Situation, Lifestyle, Personality and Self-Concept.

The Age and Life-Cycle Stage These stages explain different periods in life that the consumer
experiences as he goes through life. These different stages also represent different changes that the
consumer may experience when reaching a new stage. According to Kotler and Armstrong (2007)
marketers, therefore, define their target markets interms of the different stages in order to develop
appropriate marketing plans.

Occupation–The occupation tends to have an effect on the products and services bought by the
consumers. This leads to the possibility of developing different types of products or services that suits
interests identified to be above average within an occupation.

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The Economic Situation–Wealth will affect a consumer’s product choice. A consumer may be price-
sensitive or not depending on the level of income, level of savings, level of interest rates, and also the
product or service itself.

Lifestyle–This is identified to be a person’s way of living which is recognized by the activities, interest,
or opinion she or she has and it also explains the way a consumer interacts in the world.

Personality–This is mainly explained by the terms self-confidence, dominance, sociability, autonomy,

defensiveness, adaptability and aggressiveness. These psychological factors are a result of one’s
environment. Personality can be defined as a dynamic and organized set of characteristics possessed by a
person that uniquely influences his or her motivations, and behaviours invarious situations
(Ryckman,2004).

Self-concept or Self Image–Is the conceptual understanding that people’s possessions reflect their
personalities. This concept does bring some conflicts in case people may have an image that satisfies who
they are but does not agree with who they want to be (the ideal self-concept),the question then arises
which one I would want to satisfy.

Psychological Characteristics

The psychological characteristics are divided into the following concepts: Motivation, Perception,
Learning, and Beliefs and Attitudes.

Motivation–Motivation refers to a person needs that must be satisfied. These needs are of different kind;
some are biological, such as hunger, thirst and discomfort ,and some are psychological such as the need
for recognition, esteem and belonging. Needs are not satisfied until they reach a certain point of intensity
and become a motive for the consumer to satisfy them. Kotler and Armstrong (2007) discuss several
motivation theories, among them are Freud’s and Maslow’s theories of motivation. Freud argued that a
person does not really and fully understand his or her motivations. Maslow on the other hand wanted to
understand why some people set out to satisfy some needs before others.

He then came to the conclusion that human needs are arranged in a hierarchy from the most pressing to
the least pressing, as Kotler and Armstrong (2007) explains it. These needs are listed as psychological
needs, safety needs, socialneeds, esteem needs, and self-actualization needs. When one need has been
satisfied, a person moves on to satisfy the next.

Perception-This characteristicis based on the understanding of how differently I perceive the same
situation or the same stimuli. Kotler and Armstrong (2007) explains perception as the process by which
people select, organize, and interpret information. There are three different processes that decide how I
interpret certain information. These are Selective Attention, Selective Distortion, and Selective Retention.

Learning–Learning is, according to Kotler and Armstrong (2007), an act that changes people’s behaviour
because of their experience. It occurs through drives: strong internal wants that call for action, stimuli:
object that drives for certain action, cues: small stimuli that determinate when, where and how the person

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will respond and reinforcement: when the response and stimuli towards an object is experienced more
than once.

Beliefs and Attitudes–These are acquired by people through learning and experiencing. They influence
the buying behaviour by making up brands and product images in the consumer’s heads. A belief is
explained by Kotler and Armstrong (2007) as a descriptive thought about something and is based on real
knowledge, opinions or faith. Beliefs can also be emotionally charged. Attitudes are described as a
person’s evaluations, feelings, and tendencies towards something, but also determinations of people such
as like and dislikes.

2. .Online Consumer Characteristics

More specific identifications of the online consumer need to be made in order to understand the online
purchase behaviour. The identified characteristics are some key characteristics in regard to the online
consumer. These key characteristics were made in order to identify online consumers and to be able to
segment them.

Cultural Online Characteristics

Smith and Rupp (2003) identify that the difference in social class creates a difference in purchasing
Online Behaviour. Consumers from a higher social class generally purchase more and have a higher
intention to purchase online because there is a higher probability that they possess a computer and also
have greater access to the Internet. Consumers from lower social classes would not have the same
properties. The authors also point out that consumers with lower social class, and there by not having the
same properties, would not have the needed computer literacy to be able to leverage a computer.

Social Online characteristics

The social influence on the online consumer comes from new Reference Groups compared to the tradition
always. For the online consumer new Reference Groups were identified as virtual communities,
consisting of discussion groups on a website. The consumer can read about other people’s experiences
and opinions which have shown to have the effect of Reference Groups (Christopher &Huarng, 2003).
Other Reference Groups, which are identified by Christopher and Huarng (2003), are links to product
related websites, which encourages product selection and contact information.

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 Personal Online characteristics

Monsuwé, Dellaert and Ruyter (2004) explored the personal online consumer characteristics and
concluded that income has a vital role for online purchasing behaviour. The authors discussed Lohseetal
.(2000) who pointed out that consumers with higher house hold income would have a more positive
attitude towards online shopping. This conclusion was explained by the fact that house holds with
higher income would have a positive correlation with the possession of a computer, Internet access, and
higher education.

Smith and Rupp (2003) also identified the age factor as a determinant for online purchase intentions.
They argued that older people who had no frequent interactions with the Internet and the computer
would not use the Internet as a medium for purchases, while young adults would. This was concluded by
that the young adults used the Internet and computers more frequently. Younger people were also
identified to have more technical knowledge. Monsuwéetal. (2004) also supported this judgement by
concluding that younger adults usually have greater interest in using new technologies to browse for
information and evaluate alternatives.

Psychological Online Characteristics

Smith and Rupp (2003) identified the psychological characteristics of consumer behaviour as questions
the online consumer would ask himself before making a purchase online.

Motivation–The consumers is reasoning for incentives to engage in a particular behaviour. He may ask
himself questions like: should I look around for better price? If online shopping saves me time, should I
shop online more often? How much do I really need this product?

Perception- The consumer is interpreting acquired information by classing it. Questions such as the
following may come about: I feel that this site seems pretty secure. It seems that this site has a good
product but how can I be sure?

Personality- The consumer is adapting to influences of his cognitions. He may ask himself, what types of
Web sites are best suited for his personal buying preferences.

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Attitude- The consumer is working out what his likes and dislikes are in respect to a particular situation.
He may ask himself: I am pretty unsure about extra costs, should I really be buying items from the
Internet? If I do not buy the item online, how else can I get it?

Emotions-The consumer is without conscious effort detecting how he is being affected by his cognitive
choice. He may ask himself: The last time I ordered from the Internet I had a really bad experience
.Should I try buying online again? What is the future of buying online? If Websites get better should I
invest more time in buying online?

Specific Consumer Traits and Online

Behaviour The online consumer’s characteristics that I have identified to be the most important ones to
have an effect on the online consumer, will be referred to as specific Consumer Traits and how the
consumer uses the Internet will be referred to as Online Behaviour.

The online consumer characteristics such as personal, social, and psychological characteristics need to be
identified in order to understand what is important for the online consumer. These characteristics reveal
the consumers’ lifestyle and identify who the consumer is and what attitudes he has towards online
shopping.

Therefore, I will be using the following characteristics to segment the online consumer, by analysing:

The consumer’s demographics, as Bergmanetal.(2005).

Life patterns concerning Online Behaviour, such as how much the consumer uses the Internet,
Webographics, as Bergmanetal.(2005).

For what purposes, Internet Usage, also as Bergmanetal.(2005).

How much the online consumer shops online, Online Shopping Patterns, can be used in order to find out
what impact certain factors have on different type of consumers (Bergmanetal.2004).

Prior experiences have also been identified to be relevant for what Beliefs and Attitudes the consumer has
towards online shopping and are therefore also important for there search(Monsuwéetal.2004).

Social influences have an effect on the consumer in the early decision making stage and these were
referred to as Reference Groups (Christopher&Huarng2003).

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These are the consumer characteristics that are relevant for this research and need to be identified in order
to find out who the online consumer is and what affects him when shopping online. These I will be
referred to as Consumer Traits and Online Behaviour.

The Online Consumer Segment Subdivisions

Gender, Age,
Demographics
Income

Online Consumer Previous and

Attitude and Belifs
Traits Future Experience

Impact of Family, Friends and

reference groups Online forum
Online Consumer
Segments
Webographics Time spent online

Online Shopping
Online Behaviour Expenditure
Patterns

Fun, Work, Emails,

Internet Usage Information,
Shopping

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 Important Influencing Factors

When processing the previous literature in order to find what Specific Consumer Traits and Online
Behaviour that needs to be identified, I gained knowledge of which factors that were highly important for
the online consumer.

Brengman, Geuenes, Weijters, Smith and Swinyard (2005) segment online consumers through first
identifying the Internet usage lifestyle of every consumer; they believe that the Internet experience is
highly relevant for the identification of the online consumer. Lifestyle is, as presented above, a describing
group of consumers’ personal characteristics and is expressed as a person’s demographics. These living
patterns show what opinions and interests a consumer has for certain products, for what reasons and
which interest they have in the Internet, the Internet usage. The study came to the conclusion that four
segment groups could be conceptualized and these would categorize the online consumers according to
their shopping behavior. The different attributes, that explain these segments, show that the factors Price,
Trust and Convenience are highly relevant influencers on the online consumer shopping behavior
(Brengmanetal.,2005).

Monsuwéetal. (2004) created a framework through their study that would help the understanding of
consumer’s attitudes towards online shopping . Attitudes and beliefs are separated from consumer’s
psychological characteristics and mainly determined by learning and prior experiences.

Further, Bellenger pointsout that the ability to conduct price comparisons has been cited as a major reason
why consumers use the Internet (Wallace, 1995). Price sensitives hoppers are essentially concerned with
buying products at the lowest price or getting the best value for the money they spend (Bellenger,1980).

There have been many attempts to identify and segment the online consumer through various studies. By
reading different studies I have identified certain factors that were constantly present in the literature.
There are many factors that have an impact on the online purchase behaviour, but I have identified Price,
Trust and Convenience to be very important and will put our attention to these three factors.

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 Identified Factors affecting Online Consumer Behaviour

Price which is a part of the marketing mix is a factor used in order to stimulate the consumer and is also a
communicator, bargain tool, and a competitive weapon. The consumer can use price as a mean of
comparing products, judge relative value for money, and judge product quality.

The factor Trust is considered to be a concern on the emotional basis in the minds of the consumers. The
consumers have a focus on their safety needs and want to satisfy them before making a purchase(

The factor Convenience is considered to be a benefit in the eyes of the consumer and a quality derived
from purchasing over the Internet. It is therefore considered to be amotivator and a benefit to consumers.

We believe that these factors have a significant influence on the consumer when purchasing online. To
further analyse the factors, I study underlying attributes that represent what way the factors affect the
consumers.

The Factor Price

The Internet has become a global market place on which consumers can gather and compare information
such as product information and prices. The technologies and innovative business ideas of the Internet
allow sellers to discriminate between buyers and buyers to discriminate between vendors. Historically,
however, prices have been set by negotiations after having examined the product (Kotler & Keller, 2006).
The Internet facilitates the scenario that comparisons can be achieved with ease, overlooking several
digital attributes (which can be communicated through the web) and possibilities with several different
vendors simultaneously. On the Internet it is after all the price comparison prospect that interests price
sensitive consumers, whilst another category of consumers focuses on finding unique products with
specialized features that might be difficult to find offline and who, therefore, perhaps even consider the
price as secondary.

However, when online, only digital attributes can be evaluated by the consumer, while offline non-digital
attributes (for which physical inspection of the product is necessary) can be tested (Lal & Sarvary,1999).
This could even influence impulsive shoppers to become more cautious about the product as it can only
be inspected digitally. Furthermore, when buying online, additional costs such as freight charges, customs
or prolonged delivery times can influence the online consumer’s decision to reconsider the transaction
even though the price is low. Table3.1 clarifies the fact that the factor price has two attributes, saving
money and price comparison.

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 Factor Attributes
SavingMoney
Price
ComparingPrice

The Factor Trust

Monsuwéetal.(2004) conclude that because the Internet is a relatively new way of shopping, it is
challenging for the consumers and therefore perceived by the consumer as risky. They further identify the
sales person to be a silent source of trust for the consumer, and that the consumer is dependent on the
sales persons’ expertise. But since the salesperson has been removed in online shopping, the authors
argue that the basis of consumer trust has disappeared. They further explain that the consumer is not able
to check the quality of an item, nor is he able to monitor the safety of the security when revealing
personal data. The authors, therefore, conclude that if a high level of security and privacy is
communicated to the consumer the result would have a positive effect on consumer trust and the intention
to buy online.

According to Luhmann (1979) who has a sociological point of view on the theory of trust, there are three
modes of maintaining expectations about the future, familiarity, confidence and trust.To experience trust,
familiarity and confidence must have been established. However, trust is only necessary when there is a
high perceive drisk, such as during a purchase transaction or a similar action.

The consumer’s previous experience and trust in the computerized medium is likely to affect his amount
of trust in online shopping (Lee & Turban,2001). According to Lee and Moray (as cited in Lee & Turban,
2001) human trust in computerised systems depends on three factors:

 The perceived technical competence of the system-The systems apparent ability to perform
assigned tasks.
 The perceived performance level of the system-How fast and reliable it appears to bea ble to
finish the tasks.
 The human operators understand of the underlying characteristics and processes governing the
system’s behaviour.

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 Seller

Trust in Internet Competency

Benevolence

Ec Trust

Reliability

Trust in internet as
Understandability
Shopping channel

Security and
Payment
.

Factor Attributes

Perceptionofsafety
Trust
TrustintheInternetRetailer
TrustintheInternetasretailshopping

The Factor Convenience

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Convenience is anything that is intended to save time and frustration according to the Swedish National
Encyclopaedia. Further definitions of the concept of convenience are:

 The quality of being suitable to ones comfort, purpose or needs

 Personal comfort or advantage
 Something that increases comfort or saves work at a suitable or agreeable time(Lexico Publishing
Group[LLC],2007)

Online shopping as a new medium for retailing creates a number of different advantages. One of these is
that it is considered to be more convenient to shop online compared to the traditional way of shopping.
The convenience attributes that online shopping provides are:

 Less effort:
 Being able to shop at home
 Time saving
 Being able to shop at anytime of the day

Azjen (as cited in Kim&Park, 1991) claims that online shopping provides convenience for consumers
such as time savings and search convenience if compared to the traditional way of shopping.

Kim and Park(1991) also argue that if online shopping is to be perceived as convenient for the consumer,
the consumer must perceive a certain amount of easines s with accessing the Internet and also with
carrying out the behaviour with shopping online.The less complexity the consumer perceives with
accessing the Internet the more attention the consumer has to enter the Internet and search for
information.

The characteristics of convenience with online shopping can be summarized as follows:

Consumers can shop from their homes meaning they do not have to take certain aspects, needed when
shopping in the traditional way, into consideration. Online shopping is, therefore, considered to require
less effort. It is also considered to be time saving, the consumer can search for products and prices easy
through the developed search engines. Through tracking devices a consumer can at anytime check where
their package is. Another time aspect of online shopping is that it allows

The consumer to shop at any time of the day, the consumer does not need to consider if the stores are
open or not.Table3.3 shows the factor Convenience and its attributes.

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 Summary

By first examining consumer behaviour theories I have investigated what identifies the consumer and
the processes that the consumer goes through before making a purchase. This has been applied to gain
understanding of the online consumer buying behaviour and has then been used in order to find which
characteristics that are relevant to identify and segment the online consumer.These have been
identified as Consumer Traits and Online Behaviour and are listed below along with the respective
subsegments:

ConsumerTraits:

 Demographics
 Attitude and Beliefs
 Impact of Reference Groups

OnlineBehaviour:

 Webographics
 OnlineShoppingPatterns
 InternetUsage

Furthermore,I have pointed out certain factors that I believe are important for the online consumer
when shopping online through the literature overview. These factors have been identified as Price, Trust
and Convenience through the literature. In order to comprehend how the identified factors influence
the online consumer I must first identify the online consumer. This identification needs to be done
mainly through the relevant Consumer Traits and online consumer behaviour that have been identified
earlier.

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 CHAPTER- 3
RESEARCH METHODOLGY

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 Research Method

Since our research is of deductive character our primary intention was to collect secondary data and
analyse it. By doing so I found the factors Price, Trust and Convenience. I then collected primary data
through a survey. The main purpose of the survey was to collect data about Online Consumer Behaviour
and the significance of the established factors, Price, Trust, and Convenience.

In order to be able to find and establish Online Consumer Segments, Consumer Traits and Online
Behaviour had to be identified. The segments were used in order to further identify what impact the
factors Price, Trust, and Convenience have on Online Consumer Segments.

Segments
A segment is a subgroup of people that share the one or more characteristics and these segments have
similarities such as that they share behavioural features or have similar needs. These similarities make a
specific segment homogenous in their needs and attitudes. Different types of variables can be used in
order to segment a market and one of the requirements was that it needed to be measurable. I will be
using the identified Consumer Traits and Online Behaviour variables to segment the online consumers.

Sample
The factors that I intended to examine can be applied to and investigate data population that uses the
Internet and buys online. Since there are time and resource restraints, a specific population had to be
identified in order to generalise and create relevant segments. I decided that the sample size should
contain over 100respondents and I collected answers from 103respondents.

Non Probability, Convenience Sampling

The population for this research are Students and employees, India. The Sample was chosen on a
convenience basis. Convenience sampling involves using samples that are the easiest to obtain and is
continued until the sampling size that need is reached. The bias with the convenience sampling is that it is
hard to generalize to the wanted population (Saundersetal.,2007).

We will attempt to collect as many respondents as possible but since I will be studying students I assume
that there will be little variation in the population making it more approved to generalize the response
rates. The sampling method for students took also place on a convenience basis since the students that
agree to answer the questionnaire are those that were chosen.

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TheQuestionnaire

In order to create the questionnaire I started out by deciding on the main variables that needed to be
investigated. These were: Demographics, Web graphics, OnlineShopping Patterns ,and Attitude towards
Online Shopping, Social Characteristics, Reference Groups, and the identified factors Price, Trust, and
Convenience . For the questionnaire, which was self- administrated, I used the Delivery and collection
questionnaire method. This method was mainly used because of the limitations in time and available
resources. Different types of questions were set in order to be able to collect the information that was
needed concerning the different topics. The examined variables were of different types. They were
opinions, behaviour, and attributes.

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 Chapter – 4
Analysis and interpretation

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 Analysis
These questions were used inorder to establish the consumer demographics. They were used to find out
the respondents gender, age, semester at the University, and income.

Gender
Gender was included in the survey in order to find out if there is a difference between men and women
concerning the beliefs towards the factors. The following table will show the distribution of the male and
female respondents that were included in the survey.

Sex Frequency Percent CumulativePercent

Male 58 56.31% 56.31%
Female 44 42.72% 99.03%
Others 1 0.97% 100.00%
Total 103 100.00%

The distribution of male and female respondents shows a majority of male respondents (57%), compared
to the female respondents (42%).

Others
1% Gender

Female
42%
Male
Male
57% Female
Others

26
 Age
Age was included to find out if there is a significant relationship to what impact the factors price, trust,
and convenience have on different age groups. Age is a demographic value that can also be used in order
to further explain and elaborate on some of the other questions that are used to find segments among the
respondents. The respondents were asked to write how old they were, instead of setting up different age
groups to choose form. In this way I were able to get the exact agenda there by setup different age groups
according to the distribution.

Age
42 >=

34 - 41

25 - 33
Age

21 – 25

<= 20

0 20 40 60 80

27
Area
The above diagram is showing the percentage of demography of respondents and what is the
percentage of respondents who lives in rural or urban region, the below diagram is showing that 77% of
the respondents are from urban areas and 23% of the respondents are from urban area.

Geographical Distribution
Rural
23%

Rural
Urban
77% Urban

Occupation
This graph help us to know the occupation of the respondents, this is to know that which segment of
people are buying more products on the internet whether they are the segment of students or
government employees or professional, the above graph shows that the segment of the students
i.e.90% of the students are using internet and use to buy online products.

28
 Self Employed
Govt. Employee
3%
Other
Occupution
3% 1%

Professional Student
24%
Professional
Student Govt. Employee
69%
Self Employed
Other

Internet Connection
This graph shows us the percentage of respondents who have their own internet connections, its shows
that 87.13% of respondents have their own internet connections and 35% people don’t have their
internet connection.

Internet Connection
No
13%

Yes
Yes No
87%

29
Online Shopping
This graph shows us the percentage of respondents who have done Online Shopping, its shows that
68.93% of respondents have done Online Shopping and 31.7%people haven’t done do Online Shopping

Online Shopping

No
31%

Yes
Yes
No
69%

Motivation
Thisgraphshowsuswhatmotivatesthepeopletobuyinternet,asfromaboveresultIfoundoutthatnotraveltosh
opisthemainthingwhichmotivatesthepeopletobuyproductsonline.

Motivation
Easy
Payment Easy Payment
No travel to
shop 30%
31% No Hidden cost

Wide range of
No products
Wide Hidden No travel to shop
range of cost
products 7%
32%

30
Competitive Prices
This diagram shows us that whether online marketers are giving competitive price or not and result
which is came is that most of the people thought that online marketers are providing competitive prices
than physical stores. And results 74.65% of people say that it provides competitive prices and only
14.08% people says no.

Can’t say
Competitive Prices
10%

No
14%
Yes

Yes No
76% Can’t say

Products buy online

The above graphs gives result that most of the time people use to buy 36% but the margin with other
things is very less as music ’ save percentage of 15 and Personal and Healthcare15% S

Products buy Online

Personal and Healthcare 15
Mobiles and Acessories 34

Clothing 21
Products buy Online
Music CD's 15

Books 36

0 10 20 30 40

31
Frequently visited online store’s

Thisgraphshowsthat57%peopleusetovisitFlipkartforonlineshopping,31%usetogoatEbay,17%peopledoatA
mazonandforotherpeopleusetovisitatBestBuyandothers.

Online stores
Other 7
Myntra 13
letsbuy 6
Flipkart 57 Online stores

Amazon 17
e-bay 31

0 10 20 30 40 50 60

Factors help to decide to shop online

Thisdiagramshowsuswhataffectspeopletobuyproductsoninternetanditshowsthat21%peoplecametoknowabo
utshoppingsitesthroughsearchengines.Andtheyattractedtowardsitandstartgettingproductsfromthere.And20
%peopledecisionisaffectedbyspecialoffersbytheoffersandthediscountsgivenbythesites.

Factors help to decide which site to shop

online
Tv advertising 4
12
Special Offers On Sites 20 Factors help to decide which
14 site to shop online
Search Engine 21
0 5 10 15 20 25

32
Way of Payment
Thisdiagramshowsthatmostlypeopleusescreditcardtopaytheirpayments42%peopleusetopaybycredit/debitca
rdand14%throughCashondeliveryand11%throughInternetBankingand3frompaypal.

Way of payment
Cash-on-Delivery 14

GoogleWallet 1

Paypal 3
Way of payment
Internet banking 11

Debit/ credit card 42

0 10 20 30 40 50

FrequencyofOnlineShopping

Twice a week
4% Frequency of Online shopping
Twice a month
16%
once a
week once a month
8% once a week
once a month
72% Twice a month
Twice a week

33
Prior experience
This question was used in order to see what attitude the respondent had about shopping online. The
measured attitude was mainly derived through questions about the respondent’s prior experiences. This
usually also affects the attitude towards performing an action, in this case the action was to shop online.
The question was, therefore designed to let the respondent rate their prior experience for shopping
online.

Prior Experience
1 (Very Bad)
40
30
20
5(Very Good) 2
10 0
13
0 1 Prior Experience

24
433 3

Overall the respondents showed a good to very good prior experience with purchasing online. The
number of respondents with a very good attitude towards online shopping is high and the distributed
attitude declines as less respondents think of it as a bad experience. Rating number four on the scale is
considered as neither a good nor bad experience. The majority of respondents,overall 35.87%, do consider
their prior experience with online purchasing as neither good nor bad. This question is closely related to
the following question which investigates the respondents’ future expectations of online purchasing.

34
Future expectations of online purchases
This question is a part of analysing the respondents’ attitude towards online purchases. Future
expectations are highly dependent on respondents’ prior experiences of online purchases; this will be
further discussed in the analysis of the results.

As with prior experiences the respondents have a highly positive attitude towards future online purchases.
The majority (41.38%), of the respondents have rated future expectations with online purchases to be
positive. Not considering the neutral respondents; an overall 80.9% of the respondents had positive
expectations.

Future Expectations
1 (Very
Bad)
40
30
20
5(Very35
2
Good) 10 0
0 1 Future Expectations

11
24
4 3

Impact of Reference Groups

The impact of Reference Groups These questions were designed to find out which of the three Reference
Groups, family, friends, and online forum, that have an impact on the respondent. Families as Reference
Groups have not shown to have an impact on online purchases among students. A majority of 32.39% do
not consider any of their families’ opinions and experiences at all when purchasing online.

Family affect
1 (Not at all)
30
20 11
5(Very Much) 10 15 2
9
0 Family affect
13
4 233

35
Friends as a Reference Groups have shown to have a bigger impact as a Reference Groups when
respondents consider their purchases online. This can be explained by the fact that friends often are fellow
students that attend the same program and have relevant information that is of use to the respondent. The
distribution of the respondents shows that the majority of the respondents, 33.8%, take the opinions and
experiences of their friends into consideration.

Friends affect
1 (Not at all)
25
20
15
8
10
5(Very Much) 16 2
5 10
0 Friends affect

13
4 3
24

Online forum do not have any impact on the respondents. A majority of 40.85% of the respondents do
not consider the opinions and experiences discussed on online forums at all.

Online Forums affect

1 (Not at all)
30
25
20
15 7
5(Very Much) 10 2
8 5 9
0 Online Forums affect

18
4 3
29

36
Online Consumer Behaviour
Webographics
Time spent online

Thisquestionisusedinordertoinvestigatehowmuchtimetherespondentspendsonline.Therespondentthatspend
smoretimeonlinehasahigherexperiencewiththeInternetwhichaccordingtotheliteratureisareasontobuymoreon
line.Hence,thisquestioniscloselyrelatedtotherespondentsshoppingpatterns.Thiswillbefurtherdiscussedinthe
analysisoftheresults.

Time spent

>5 < 30
34% 11%
1 - 2 hours < 30
28% 1 - 2 hours
2 - 5 hours
2 - 5 hours
27% >5

Thedistributionshowsthatthemajorityoftherespondentsspendsomewherebetween30minto2hoursonlineeach
day.Thetwosecondmajorgroupsarerespondentsthatspend5hoursandrespondentsthatspendgreaterthan2-
4hoursonlineeachday,34%respectively27%.Theseresultswillbeusedinordertofindwhatdiffersbetweentheser
espondentsandwhichofthefactorsprice,trustandconveniencehasthelargestamountofimpact.

InternetUsage
ThisquestionwasincludedtoinvestigateforwhatreasontherespondentsmainlyusedtheInternet.Therespondents
weregiven5alternativesfromwhichtheyhadtorank3bytheprimary,secondary,andtertiarychoiceofusage.

Table0-1Q2.2Distributionaccordingtothevariables“Primaryuse,Secondaryuse,andTertiaryuse”

InternetUsage PrimaryUsage SecondaryUsage TertioryUsage

Fun 11(15.49%) 9(12.67%) 14(19.71%)
Work 21(29.58%) 16(22.54%) 9(12.67%)
Information 21(29.58%) 13(18.30%) 16(22.54%)

37
 E-Mail 16(22.54%) 29(40.84%) 12(16.90%)
Shopping 2(2.82%) 4(5.63%) 20(28.17%)
Total 71 71 71
Accordingtothetable5.15therespondentsastheprimarymostpopularuselistedthealternativesWork(29.58%),I
nformation(29.58%)andEmail(22.54%),accordingly.Thesecondaryoverallmostpopularchoiceswerethealter
nativesE-
mail(40.84.54%),Work(22.54%)andInformation(18.30%).ThetertiarymostpopularchoiceswereShopping(2
8.17%),Information(22.54%)andFun(19.71%).AccordingtothedistributionthealternativesFun,E-
mailandInformationwerethemostpopularalternatives,withtheexceptionofFunastertiaryusewherethatalternat
ivewasreplacedwithwork.

Price
Saving money when purchasing online compared to purchasing at store this is the first attribute of the
factor price and involves the respondents’ attitude towards saving money when purchasing online. The
respondent was asked two questions in order for us to establish their attitude. The first question examined
if the respondent agrees with the fact that purchasing online saves money and these cond question
examines the importance of this statement. The results from these two questions gave us the following
distribution of what the respondents’ attitude towards this statementis.

Saving Money
1 (Not at all)
25
20
15
10 6
5(Always)
21 2
5
2
0 Saving Money

4
22 203

The diagram shows whether the respondents feel that they are saving money when they purchase online
compared to a regular store.40.7% of the respondents felt that they saved money and that it is important to
save money when they purchase online., with 23.5% where the respondent felt that they neither save
money nor do not save money .

38
COMPARING PRICES
The reason for the values being so high can be that even though the Comparing prices, through different
price comparison websites, before purchasing online.

Comparing Price
1 (Negative)
25
20
15
24 10
5(Positive) 2
5 1
4
0 Comparing Price

18
4 3
24

Diagram shows how the respondents use price comparison sites such as Ebayor Myntra. Almost everyone
uses this type of comparison prior to purchasing a, more or less often, and a large group (31.9%) of the
respondents does so very often. This displays an overall positive attitude towards comparing price over
the Internet even though the largest group of 24 respondents (33.80%)consider comparing price over the
Internet as positive. This can be concluded by the fact that the respondents might not compare prices but
think that it is important. This then translates into neither a positive nor a negative attitude towards
comparing prices when purchasing online. The respondent might also compare prices but does not find it
important.

39
Trust
It is secure to shopping online

This question investigates what the respondents overall attitude is towards the first attribute I identified
that constitutes the factor trust. This attribute involves the respondent over all attitudes towards security
when shopping online. The respondent was first asked to answer whether they felt secure when shopping
online and then how important it is for them to feel safe when Shopping online.

2 12 16.90% 18.31%
3 23 32.39% 50.70%
4 19 26.76% 77.46%
5(Positive) 16 22.54% 100.00%
Total 71 100.00%

The values in table5.18 explain whether the respondents feel that it is safe to purchase online, and if it is
important to feel secure when purchasing online. The largest category (32.39%) feels secure and also
thinks it is important to feel neither secure nor not secure when shopping online. These condlargest
(26.76%), with just one respondent less, is the category slightly more positive than “neither”. The large
number could come from respondents that not feel secure when they shopping online, but never the less
feels that it is important to feel secure when they do. Hence, the distribution of the respondents reveals
that they generally have a more positive attitude towards feeling secure when shopping online.

Trust in the Internet retailer

This question investigated the respondents overall attitude towards the trust in the Internet retailer. Two
questions were asked, one asked if the respondent has to trust the Internet retailer in order to make a
purchase from them, and these condquestion asked how important it is to have trust in the Internet
retailer before making a purchase from them. The results showed the respondents overall attitude
towards the third and last attribute constituting the factor trust.

Table0-2Q7.2Distributionaccordingtotheattribute“TrustintheInternetretailer”

ComparingPrice Frequency Percent CumulativePercent

1(Negative) 2 2.82% 2.82%
2 7 9.86% 12.68%
3 24 33.80% 46.48%
4 28 39.44% 85.92%
5(Positive) 10 14.08% 100.00%
Total 71 100.00%

40
The majority feel a need to trust the retailer, while also feeling that it is important to trust there tailer
when proceeding with a purchase. Only three respondents fell into the negative part of the scale. This
indicates that trust in the Internet retailer, to some degree, is almost always needed for the consumer to
make a purchase from an Internet retailer.

Convenience
If online purchasing is perceived as involving less effort compared to shopping at a store This question
examines one of the attributes that constitutes the factor convenience and is included in the
questionnaire in order to find out if the respondents perceive that purchasing online involves less effort
than compared to shopping in a store. This question is also a part of the fact or convenience and the
overall attitude the respondents have towards the factor convenience.

ComparingPrice Frequency Percent CumulativePercent

1(Negative) 0 0.00% 0.00%
2 8 11.27% 11.27%
3 12 16.90% 28.17%
4 22 30.99% 59.15%
5(Positive) 29 40.85% 100.00%
Total 71 100.00%

The majority (40.85%) of the respondents did not find shopping online is convenient when it involved
the attribute less effort. The further distribution of all the respondents had a positive attitude towards
the attribute less effort. This is clearly shown by that one of the largest respondent groups (30.99%) is
the group with the highest value that perceived shopping online as always involving less effort
compared to shopping in store. Hence, there is an overall a positive attitude towards this attribute
among the respondents.

41
Does online purchasing save time compared to purchasing at a
store?
e”

ComparingPrice Frequency Percent CumulativePercent

1(Negative) 2 2.82% 2.82%
2 8 11.27% 14.08%
3 15 21.13% 35.21%
4 22 30.99% 66.20%
5(Positive) 24 33.80% 100.00%
Total 71 100.00%

The two big majority groups (33.90% respectively 30.99%) found shopping online either as always time
saving or that neither it saves time nor is more time consuming than shopping at store.The overall
distribution of the respondents had showed a positive attitude towards the attributes hopping online
saves time compared to shopping at a store. This is a logical conclusion that can be derived from the fact
that when shopping online from a computer at home does not involve having to leave the home, which
can be considered as time saving. But some complications at the website or being able to use a
computer from home, can explain the why the majority of respondents do considers shopping online
neither as time saving nor is more time consuming than shopping at store. This explanation can also be
applied to the respondents on the negative side of the scale.

1.1.1 Primary Factor

By considering all the attributes of the factors and looking at what factor each respondent had the most
positive attitude towards and labelling it as the Primary Factor, I were able to identify the following
distribution among the respondents for the factor sprice, trust and convenience in table 5.25:

Distribution according to the“Primary Factor”

PrimaryFactor Frequency Percent CumulativePercent

Price 53 75.71% 75.71%
Trust 10 14.29% 90.00%
Convenince 7 10.00% 100.00%
Total 70 100.00%

42
TheFactors
In order to gain an initial understanding of how the respondent feels towards

Price, Trust and Convenience, they were asked to rank these in the questionnaire accordingly. I have
then investigated the different attributes of the factors.

When the respondent was asked to just rank the different factors, the results showed that 73.9%
considered price as the primary concern when purchasing online. When the respondent was put in front
of the three factors, I could see that most of them chose price.However, if compared to the Primary
Factor, where the different attributes to the factors were used to find the overall attitude and
importance; the results did not match. The distributions for the Primary Fact or were Price: 41.6%,
Trust:30.1% and Convenience: 28.3%. This showed that the respondent generally thought that Price was
the most important to him or her, but at the same time one of the other factors could actually be the
most important to a respondent, since the distribution shifted between the two ways of evaluating, with
the Primary Factor being the most accurate since it offers an overall attitude measurement. This
answers the questions one and two in our research.

Two Step Cluster

The two step cluster analysis was used to segment the respondents. This type of analysis grouped data
so that records within a group were similar. It could be applied to data that described customer buying
habits, gender, age, income etc. It created segments containing groups that had the most in common
and this method was selected due to the amount of variables that needed to be taken into
consideration when creating the segments.

By analysing the collected data, for the various variables that I intended to segment by, I decided to
exclude some variables. There as on was that some of the variables did not show a significant variation
which would have enhanced the homogeneity of the segments. Segments need to be homogenous and
diverse from the whole population in order for them to be targeted. The variables that I did not use
would instead be applied to give an additional explanation to the formed segments. With the two step
cluster analysis I found three segments in our sample, based on the variables that I chose to segment by,
which were: Expenditure on an average each month, Previous experience with purchasing online, Future
expectations with purchasing online, The impact of the reference group: family, The impact of the
reference group: friends, and The impact of the reference group: online forums. In this research the
variables are categorized into the following variables shown by Figure6.1.

43
LIMITATIONS

There are a number of factors influencing the online consumer. However, this research will try to
identify the main factors influencing the online consumer and will, therefore, try to limit these to a few
in order to be able to investigate the effect on the online consumer. Within the field of consumer
behaviour there are many theories and models that identify the consumer.This research will limit itself
to identifying the consumer through his/her consumer characteristics and the consumer buying process.
Consumer behaviour differs depending on what product or service is bought. Hence, different factors
are of different importance to consumers depending on the product or service. Therefore this research
will limit itself to since this is the product that is most widely bought on the Internet. This seemed to be
the most appropriate choice considering the limitations in both time and resources.

44
Appendix

The Questionnaire

1. What is your Gender? *

Male
Female
Transgender

2. Which category best describes your age? *

<=20
21-25
25-33
34-41
42>=

3. Which area you belongs to? *

Rural
Urban

4. What is your occupation/ Employment status? *

Student
Professional
Government Employee
Self Employed
Other:

5. Do you have your own internet connection? *

Yes
No

6. Have you ever done online shopping *

Yes
No

45
7. What motivates you to buy Online? *
Easy payment
No hidden cost
Wide range of products
No travel to shop

8. Do you feel that the online marketers are providing competitive prices? *
Yes
No
Cant say

9. What products you buy on internet? *

Books
Music CD's
Clothing
Mobiles and Acessories
Personal and Healthcare

10. Which of the following stores have you visited online? *

e-bay
Amazon
Flipkart
letsbuy
Myntra
Other:

11. What factors help you to decide which site to use for online shopping? *
Search Engine
Personal Recommendation
Special Offers On Sites
Online Advertising
Tv advertising

46
12. How do you make your payments on internet ? *
Debit/ credit card
Internet banking
Paypal
GoogleWallet
Cash-on-Delivery

13. How often you do Online shopping? *

once a month
once a week
Twice a month
Twice a week

14. How is your previous experience with online purchases? *

1 2 3 4 5
Very Bad Very Good

15. What is your future expectations of online shopping? *

1 2 3 4 5
Very Bad Very Good

16. How much does family affect online purchase? *

1 2 3 4 5
Not at all Very much

17. How much does friends affect online purchase? *

1 2 3 4 5
Not at all Very much

18. How much does online forums affect online purchase? *

1 2 3 4 5
Not at all Very much

47
19. How much time do you spend online daily? *
< 30 min
1-2 hours
2-5 hours
> 5 hours

20. How much percentage of your online time consists of online shopping? *
< 20%
20-40%
40-60%
> 60

21. What is the reason to use Internet *

Fun Work Information Email Shopping

Primary usage

Secondary usage

Tertiary usage

22. Are you saving money while purchasing items online? *

1 2 3 4 5
Not at all Always

23. Do you compare price through different price comparison websites? *

1 2 3 4 5
Negative Positive

24. Do you find it secure to purchase things online? *

1 2 3 4 5
Negative Positive

25. Do you trust the internet retailer? *

48
 1 2 3 4 5
Negative Positive

26. Is purchasing online saves time compared to purchasing items on a store? *

1 2 3 4 5
Negative Positive

27. Is purchasing online involves less effort compared to purchasing items at a store? *

1 2 3 4 5
Negative Positive

49
50