1. Chapter 4 Consumer Behavior, Online Market Research, and
Customer Relationship Management

2. Learning Objectives
Describe the factors that influence consumer behavior online.
Understand the decision-making process of consumer purchasing online.
Describe how companies are building one-to-one relationships with customers.
Explain how personalization is accomplished online.
Discuss the issues of e-loyalty and e-trust in EC.

3. Learning Objectives (cont.)
Describe consumer market research in EC.
Describe CRM, its methods, and its relationship with EC.
Explain the implementation of customer service online and describe its tools.
Describe Internet marketing in B2B, including organizational buyer behavior.

4. Learning about Consumer Behavior Online
Model of consumer behavior online
independent (or uncontrollable) variables
intervening or moderating variables
decision-making process
dependent variables

5. Learning about Consumer Behavior Online

6. Learning about Consumer Behavior Online (cont.)
Independent variables
Personal characteristics
Environmental variables
Social variables
Cultural/community variables
Other environmental variables

7. Learning about Consumer Behavior Online (cont.)
Intervening (moderating) variables
variables are those that can be controlled by vendors
Dependent variables: the buying decisions
customer makes several decisions
“to buy or not to buy?”
“what to buy?”
“where, when, and how much to buy?”

8. Consumer Decision Making Process
Roles people play in the decision making process
Initiator
Influencer
Decider
Buyer
User

9. Consumer Decision Making Process (cont.)
5 phases of the generic purchase decision model:
need identification
information search
evaluation of alternatives
purchase and delivery
after-purchase evaluation

10. Consumer Decision Making Process (cont.)

11. Consumer Decision Making Process (cont.)

12. One-to-One Marketing and Personalization in EC
One-to-one marketing: Marketing that treats each customer in a unique way
Personalization: The matching of services, products, and advertising content to individual consumers
User profile: The requirements, preferences, behaviors, and demographic traits of a particular customer

13. One-to-One Marketing and Personalization in EC (cont.)
Major strategies used to compile user profiles
Solicit information directly from the user
Observe what people are doing online
Build from previous purchase patterns
Perform marketing research

14. One-to-One Marketing and Personalization in EC (cont.)
Cookie: A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site

15. One-to-One Marketing and Personalization in EC (cont.)
Collaborative filtering: A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

16. One-to-One Marketing and Personalization in EC (cont.)
Customer loyalty
Customer loyalty: Degree to which a customer will stay with a specific vendor or brand
Increased customer loyalty produces cost savings through:
lower marketing costs
lower transaction costs
lower customer turnover expenses
lower failure costs
E-loyalty: Customer loyalty to an e-tailer

17. One-to-One Marketing and Personalization in EC (cont.)
Trust in EC
Trust: The psychological status of involved parties who are willing to pursue further interaction to achieve a planned goal
Trust is influenced by many variables

18. One-to-One Marketing and Personalization in EC (cont.)

19. One-to-One Marketing and Personalization in EC (cont.)
How to increase EC trust
between buyers and sellers trust is determined by:
degree of initial success that each party experienced with EC and with each other
well-defined roles and procedures for all parties involved
realistic expectations as to outcomes from EC

20. One-to-One Marketing and Personalization in EC (cont.)
Issues in personalization
brand recognition
security mechanisms help solidify trust
disclose and update latest business status and practices to potential customers and to build transaction integrity into the system
guarantee information and protection privacy through various communication channels

21. Market Research for EC
Goal of market research is to find information and knowledge that describes the relationships among:
consumers
products
marketing methods
marketers

22. Market Research for EC (cont.)
Aim of marketing research is to:
discover marketing opportunities and issues
establish marketing plans
better understand the purchasing process
evaluate marketing performance
develop advertising strategy

23. Market Research for EC (cont.)
Market segmentation: The process of dividing a consumer market into logical groups for conducting marketing research, advertising, and sales
Market research tools
data modeling
data warehousing

24. Market Research for EC (cont.)
What are we looking for in EC online research?
personal profile that helps marketers explain and predict online buying behavior

25. Market Research for EC (cont.)
Online market research methods
Web-based surveys
Online surveys are easy: SurveyMonkey
Online focus groups
Hearing directly from customers
Customer scenarios
Tracking customer movements
DoubleClick

26. Market Research for EC (cont.)
Transaction log
A record of user activities at a company’s Web site
Clickstream behavior
Customer movements on the Internet; and, what the customer is doing there

27. Market Research for EC (cont.)
Cookies, Web Bugs, and Spyware
Web bugs: Tiny graphics files embedded on messages and in Web sites that transmit information about the user and their movements to a Web server
Spyware: Software that gathers user information, through an Internet connection, without the user’s knowledge
Analysis of B2C clickstream data

28. Market Research for EC (cont.)
Limitations of online market research
too much data may be available—need business intelligence to organize, edit, condense, and summarize it
accuracy of responses
loss of respondents because of equipment problems
ethics and legality of Web tracking

29. CRM and Its Relationship with EC
Customer relationship management (CRM): A customer service approach that focuses on building long-term and sustainable customer relationships that add value both for the customer and the company

30. CRM and Its Relationship with EC (cont.)
Classification of CRM programs
Loyalty program
Prospecting
Save or win back
Cross-sell/up-sell
eCRM: Customer relationship management conducted electronically

31. CRM and Its Relationship with EC (cont.)
Extent of service
Customer acquisition (prepurchase support)
Customer support during purchase
Customer fulfillment (purchase dispatch)
Customer continuance support (postpurchase)

32. CRM and Its Relationship with EC (cont.)
Benefits of CRM
Provides:
choices of products and services
fast problem resolution and response
easy and quick access to information
Limitations of CRM
Requires integration with a company’s other information systems which is costly
Difficult to support mobile employees

33. CRM Applications and Tools: Delivering Customer Service in Cyberspace
CRM applications improve upon traditional customer service by means of easier communications and speedier resolution of customer problems
Customer service adds value to products and services
It is an integral part of a successful business

34. CRM Applications and Tools (cont.)

35. Internet Marketing in B2B
Organizational buyer behavior
number of organizational buyers is much smaller than the number of individual buyers
transaction volumes are far larger
terms of negotiations and purchasing are more complex

36. Internet Marketing in B2B (cont.)