Consumer Behaviour with Information Technology

The first major impact of information technology, as we think of it today, was the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI, introduced in the late 1970s) to send commercial documents like purchase orders or invoices electronically. Later, with the development of the internet, the effect of information technology on consumer behavior could be seen in the purchase of goods and services over the World Wide Web via secure servers with e-shopping carts and with electronic pay services, like credit card payment authorizations. The Internet Boom: First we must confront the question of what happened during the late 1990s. Viewed from 2003, such an exercise is undoubtedly premature, and must be regarded as somewhat speculative. No doubt a clearer view will emerge as we gain more perspective on the period. But at least I will offer one approach to understanding what went on. I interpret the Internet boom of the late 1990s as an instance of what one might call “combinatorial innovation. ” Every now and then a technology, or set of technologies, comes along that offers a rich set of components that can be combined and recombined to create new products.

The arrival of these components then sets off a technology boom as innovators work through the possibilities. ” http://www. sims. berkeley. edu/~hal/Papers/mattioli/mattioli. html “The Internet for us was like air. It was there all the time – you wouldn’t notice it existed unless it was missing. But the Internet as a major social phenomenon didn’t enter our radar until the advent of the World Wide Web, which was developed in Europe at CERN, beginning in 1989, by a team of physicists that included an alumnus of the Media Lab. That was what provoked the big change in the Internet. ” http://archives. obs-us. om/obs/english/books/nn/bd1101bn. htm ———————-The impact of information technology————————- “Electronic commerce is fundamentally changing the way consumers shop and buy goods and services . Consumers have begun to learn how to act in an ever-changing electronic market environment. Like any diffusion of innovation, there is a learning curve for most consumers to behave in electronic commerce in a way they feel the most comfortable. For some consumers, shopping and buying online have become part of their daily lives, whereas others may consider it, without taking any action yet.

What factors can explain the differences in online buying behavior among Internet users? Our purpose in this study is to identify what factors determine whether Internet users choose to buy or not buy online, and how frequently they make such purchases. ” http://www. ascusc. org/jcmc/vol5/issue2/hairong. html “The economic impact of the digital revolution is, in many ways, undeniable. Without the Internet, for example, globalization and outsourcing would not be nearly as viable as they are today. Nevertheless, computers are not a silver bullet magically solving all problems they are applied to.

For example, it can be argued that the coming forth of desktop publishing in the mid 1980s actually slowed office workers down. Whereas previously, they could just jot a quick note on a piece of paper and maybe photocopy it to three or four co-workers, now people feel the need to have spell checked, grammatically correct and visually stunning memos! With the wide spread acceptance of presentation software, now people spend uncounted hours preparing presentations for a few co-workers, when a chat at a chalk board would have accomplished nearly the same thing a generation ago.

Some innovations, such as the cell phone have clearer economic return. The cell phone had measurable impact on the productivity of the American worker in the late 1990s that was far greater than most other technological improvements. ” http://en. wikipedia. org/wiki/Digital_Revolution “The Net and other online systems – not to mention the growing presence of personal computers. Andy Grove, CEO of Intel, is fond of pointing out that every two years more computing is manufactured than existed on the planet previously.

By 2000, Grove estimates, the PC industry will be shipping 100 million Pentium-style microprocessors a year. I think he’s wrong: he’ll be shipping 500 million. ” http://archives. obs-us. com/obs/english/books/nn/bd1101bn. htm “Wired: Why do you think computers are going to replace TVs? Negroponte: For the past five years, people who build TV sets have been putting more and more computation into their TVs, and people who build personal computers have been putting more and more video into their personal computers. When these two industrial trends converge, there will be no distinction between the two.

Don’t worry about the difference between the TV set and the PC. That’s not fundamental, because basically a TV set is a personal computer you look at from the sofa. Focus on the broadcasting side of it. In the future, we won’t be pushing bits at people like we’re doing today. It doesn’t matter whether you call the receiver a TV or a PC. What’s going to change is how those bits are delivered. ” http://archives. obs-us. com/obs/english/books/nn/bd1101bn. htm Future Predictions: “[In the PSG report on predictions for 2000], my focus was on point-of-sales information being integrated with Web data.

People are collecting so much data about what people are buying and returning, what goes in the shopping cart, what comes out of the cart? But a missing piece of the customer picture is the information from point-of-sales systems within stores. This information is captured for accounting and inventory, but too few companies actually use their point-of-sales system to collect customer information. More clicks-and-mortar companies will not only start collecting information at the cash register but will integrate this information with data collected online and from catalog sales, feeding it all into marketing automation systems. http://www. agilebrain. com/seybold. html Several factors have a role in the success of any e-commerce venture. They may include: 1. Providing value to customers. Vendors can achieve this by offering a product or product-line that attracts potential customers at a competitive price, as in non-electronic commerce. 2. Providing service and performance. Offering a responsive, user-friendly purchasing experience, just like a flesh-and-blood retailer, may go some way to achieving these goals. 3. Providing an attractive website.

The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect. 4. Providing an incentive for customers to buy and to return. Sales promotions to this end can involve coupons, special offers, and discounts. Cross-linked websites and advertising affiliate programs can also help. 5. Providing personal attention. Personalized web sites, purchase suggestions, and personalized special offers may go some of the way to substituting for the face-to-face human interaction found at a traditional point of sale. 6. Providing a sense of community.

Chat rooms, discussion boards, soliciting customer input, loyalty schemes and affinity programs can help in this respect. 7. Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement. 8. Providing a 360-degree view of the customer relationship, defined as ensuring that all employees, suppliers, and partners have a complete view, and the same view, of the customer. However, customers may not appreciate the big brother experience. 9. Owning the customer’s total experience.

E-tailers foster this by treating any contacts with a customer as part of a total experience, an experience that becomes synonymous with the brand. 10. Streamlining business processes, possibly through re-engineering and information technologies. (from: http://en. wikipedia. org/wiki/E-commerce) Problems posed by e-commerce: “From the perspective of the privacy advocate, digital information today is far too easy to reproduce, and far too hard to destroy. Once a piece of digital data is put onto the Internet, it is copied by search engines, various archives and other places.

If you posted an article about a teacher in your high school using illegal drugs to a blog, that information would be readily available to anyone searching the Internet for years, regardless of the truthfullness of the story. ” http://en. wikipedia. org/wiki/Digital_Revolution Even if a provider of E-commerce goods and services rigorously follows these sixteen “key factors” to devise an exemplary e-commerce strategy, problems can still arise. Sources of such problems include: 1. Failure to understand customers, why they buy and how they buy.

Even a product with a sound value proposition can fail if producers and retailers do not understand customer habits, expectations, and motivations. E-commerce could potentially mitigate this potential problem with proactive and focused marketing research, just as traditional retailers may do. 2. Failure to consider the competitive situation. One may have the capability to construct a viable book e-tailing business model, but lack the will to compete with Amazon. com. 3. Inability to predict environmental reaction. What will competitors do? Will they introduce competitive brands or competitive web sites.

Will they supplement their service offerings? Will they try to sabotage a competitor’s site? Will price wars break out? What will the government do? Research into competitors, industries and markets may mitigate some consequences here, just as in non-electronic commerce. 4. Over-estimation of resource competence. Can staff, hardware, software, and processes handle the proposed strategy? Have e-tailers failed to develop employee and management skills? These issues may call for thorough resource planning and employee training. 5. Failure to coordinate. If existing reporting and control elationships do not suffice, one can move towards a flat, accountable, and flexible organizational structure, which may or may not aid coordination. 6. Failure to obtain senior management commitment. This often results in a failure to gain sufficient corporate resources to accomplish a task. It may help to get top management involved right from the start. 7. Failure to obtain employee commitment. If planners do not explain their strategy well to employees, or fail to give employees the whole picture, then training and setting up incentives for workers to embrace the strategy may assist. 8. Under-estimation of time requirements.

Setting up an e-commerce venture can take considerable time and money, and failure to understand the timing and sequencing of tasks can lead to significant cost overruns. Basic project planning, critical path, critical chain, or PERT analysis may mitigate such failings. Profitability may have to wait for the achievement of market share. 9. Failure to follow a plan. Poor follow-through after the initial planning, and insufficient tracking of progress against a plan can result in problems. One may mitigate such problems with standard tools: benchmarking, milestones, variance tracking, and penalties and rewards for variances. 0. Becoming the victim of organized crime. Many syndicates have caught on to the potential of the Internet as a new revenue stream. Two main methods are as follows: (1) Using identity theft techniques like phishing to order expensive goods and bill them to some innocent person, then liquidating the goods for quick cash; (2) Extortion by using a network of compromised “zombie” computers to engage in distributed denial of service attacks against the target Web site until it starts paying protection money. http://en. wikipedia. org/wiki/E-commerce ——————————-Product Overview———————————– “Certain products/services appear more suitable for online sales; others remain more suitable for offline sales. Many successful purely virtual companies deal with digital products, including information storage, retrieval, and modification, music, movies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Virtual marketers can sell some non-digital products and services successfully.

Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letterbox – such as music CDs, DVDs and books – are particularly suitable for a virtual marketer, and indeed Amazon. com, one of the few enduring dot-com companies, has historically concentrated on this field. ” http://en. wikipedia. org/wiki/E-commerce “Wired: Printed books have been around for 500 years. Obviously, they’re an enduring medium.

Negroponte: The thing that’s been around for thousands of years and is so powerful is the word. The power of the word is extraordinary, and if the word is embodied as text, that, too, is powerful, regardless of whether the text lives as ink on pulp or signal on fiat-panel display. Words aren’t going away, and I think the book/no-book argument is dumb once you realize that all we’re talking about are variations in display technology. I’m not anti-book or anti-print; it’s just that soon we’re going to be doing our “printing” in a different medium. ” http://archives. obs-us. om/obs/english/books/nn/bd1101bn. htm ————–Consumer Acceptance of New Technologies——————- “Consumers have accepted the e-commerce business model less readily than its proponents originally expected. Even in product categories suitable for e-commerce, electronic shopping has developed only slowly. Several reasons might account for the slow uptake, including: *Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and fraud. *Lack of instant gratification with most e-purchases (non-digital purchases).

Much of a consumer’s reward for purchasing a product lies in the instant gratification of using and displaying that product. This reward does not exist when one’s purchase does not arrive for days or weeks. *The problem of access to web commerce, particularly for poor households and for developing countries. Low penetration rates of Internet access in some sectors greatly reduces the potential for e-commerce. *The social aspect of shopping. Some people enjoy talking to sales staff, to other shoppers, or to their cohorts: this social reward side of retail therapy does not exist to the same extent in online shopping. http://en. wikipedia. org/wiki/E-commerce ————————Important Studies—————————————- The Impact of Perceived Channel Utilities, Shopping Orientations, and Demographics on the Consumer? s Online Buying Behavior http://www. ascusc. org/jcmc/vol5/issue2/hairong. html This study proposed and tested a model of consumer online buying behavior. The model posits that consumer online buying behavior is affected by demographics, channel knowledge, perceived channel utilities, and shopping orientations. Data were collected by a research company using an online survey of 999 U.

S. Internet users, and were cross-validated with other similar national surveys before being used to test the model. Findings of the study indicated that education, convenience orientation, experience orientation, channel knowledge, perceived distribution utility, and perceived accessibility are robust predictors of online buying status (frequent online buyer, occasional online buyer, or non-online buyer) of Internet users. Implications of the findings and directions for future research were discussed. ” ————————Economic Theories/ Theorists/ Models——————- *Nicholas Negroponte

From Wikipedia, the free encyclopedia. http://en. wikipedia. org/wiki/Nicholas_Negroponte “Nicholas Negroponte (born 1943) is a Greek-American computer scientist best known as founder and director of Massachusetts Institute of Technology’s Media Lab. In 1968 he also founded MIT’s Architecture Machine Group, a combination lab and think tank which studied new approaches to the human-computer interface. In 1985, Negroponte piloted MIT’s Media Lab into existence. It developed into a famous and generously-funded computer science laboratory for new media and a high-tech playground for investigating the human-computer interface.

In 1992, he became involved in the creation of Wired Magazine as a minority investor. From 1993 to 1998, he contributed a monthly column to the magazine in which he reiterated a basic theme, his credo “Move bits, not atoms. ” Negroponte expanded many of the ideas he wrote about in his Wired columns to a bestselling book Being Digital (1995), in which he surveyed the recent history of media technology, his now rehashing well-known forecast that the interactive world, the entertainment world, and the information world would eventually merge.

Being Digital sold well and was translated into some twenty languages. However, critics faulted his techno-utopian ideas for failing to consider the historical, political, cultural realities with which new technologies should be viewed. In the years following dot-com bust, the book dated quickly. Yet one can still appreciate the unique quality of the author’s vision, and draw inspiration from the sense of speculative possibility that washes over the reader. ” Negroponte’s homepage at the Media Lab http://www. media. mit. edu/people/bio_nicholas. html