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Factors affecting customer behaviour in online purchases: A Critical Analysis of online retail store Jing Dong and Taobao

[Name of the Writer]

[Name of the Institute]

[Date]

ABSTRACT

The main objective of this study was to critically analyse the factors affecting customer behaviour and how it influences the online purchases of the customer. The objective and aim of the research were successfully achieved by the researcher by selecting the case of online retailers as Jing Dong and Taobao. In this research, the researcher selected quantitative method for collecting data and analysing the data. Moreover, primary and secondary methods for collection opted for this research. The primary method was used in order to check the impact of one variable on another variable. However, the secondary data was used in order to complete the literature review of the study. For the collection of data, questionnaire analysis was selected in order to complete the research. There were 100 participants who filled the questionnaire online. The results were analysed using descriptive analysis, regression and correlation analysis. The results analysed that there is a significant impact of factors affecting customer behaviour on online purchases in case of online retailers.

Table of Contents

CHAPTER 1: INTRODUCTION

Introduction

This chapter provides an overview of the research and allows the reader to gain initial insights which can be beneficial for proceeding with the study. Within this chapter, the researcher has provided a brief overview of the research regarding the nature of the topic and what areas it covers. Furthermore, this chapter also entails aims and objectives of the research which needs to be achieved during the research process and further needs to address the research problem.

The emergence of the internet and online retail websites has shifted the shopping behaviour of the customers from the traditional mode of purchasing products to an entirely new form. Moreover, a consumer is no longer bound to purchase the products from the physical stores, grocery stores or malls or visit specific locations in order to fulfil their needs and wants regarding the products and services (Chu and Kim, 2011). As a result, they are facilitated by different online retail websites to purchase the products from those websites which fulfil their expectations and needs (Rahbar and Abdul Wahid, 2011, p. 73). Therefore, the revival of the traditional mode of purchasing products has attracted the attention of the retailers to introduce their online websites for the ease of the consumers from which they can avail the products and services online excluding the factor of visiting the stores physically.

In the present business situation, companies are heavily investing on generating their online websites in order to provide convenience to the customers if they are unable to visit their outlets. However, with the growing significance of the innovation and internet facilities, many organisations and businesses are entering into an online retail business so as to influence the behaviour of the customers. In the light of Joung (2014), online purchases determines the activity of the customers which deals in buying of goods and services through online websites and influence the shopping behaviour of the customer. Nowadays, e-commerce websites are taking place of the traditional mode of purchasing of the consumers because they find it more convenient to purchase from online websites as it saves their time and energy and gets facilitated by the products without visiting the physical stores. It is evident that customer behaviour is the root of formulating marketing strategies and product formulation in an organisation which is affected by some of the factors regarding the online purchases (Bruwer, Saliba and Miller, 2011, p.5). However, a detailed study conducted on the customer behaviour suggested that it is the key to achieve success in the organisation (Solomon et al, 2012). Therefore, this study has focused on factors that affect customer behaviour concerning online purchases in the case of online retail websites Jing Dong and Taobao.

Contextual Background

An abundant amount of studies have been conducted on customer behaviour within the context of formulating marketing strategies to understand their needs and expectations from the product. According to Hasan, and Nasreen (2012, p. 7), organisation that better understands their customers are more likely to be successful in the industry and gain a better competitive advantage by producing the products that suits the needs and expectations of the customers. However, the appropriate knowledge about the consumer would help the organisation in planning and implementing effective marketing strategies that can attract existing and new customers (Oliver, 2014). Moreover, by gaining knowledge about the factors that affect the customer behaviour, the marketers can predict how the consumers would react to their marketing strategies.

According to Martin and Clore (2013), attitudes of the consumers are learned predisposition to the response of an object. Customers hold different attitudes towards different products which is important for the marketer to understand. However, theoretically it summarizes the evaluation of the consumers towards a product or service and showing their positive and negative feelings depends on their behavioural tendencies. Moreover, the attitude of the customers does not always hold negative feelings towards the product due to the fact that it can affect the behaviour of the customer. In the light of George and Yaoyuneyong (2010), consumer attitude is a combination of positive and negative feelings which is favourable to their purchase decision towards a product and service. Therefore, an individual’s attitude is based on the mental state for buying the product and services.

In the contemporary business situation, consumers are mostly likely to purchase their product and services from online shopping websites which have become a growing trend in the industry. Most of the companies are providing online websites to the customers as it can save their time and energy (Izuma et al.  2010, p. 22). It is also evident that consumers have a discomfort when purchasing from online shopping websites particularly when purchasing high involvement products such as cell phones, LEDs or Laptops because it requires an adequate amount of investment by the consumers for the purchase of such products (Wicklund and Brehm, 2013). The reliability factor comes before the purchase of the product from online website because consumers cannot have live experience for the product they are purchasing from the online website as a result they look for alternatives and compares the products from the alternatives available to them.

The online purchases of the customer is referred as the process of purchasing the products and services from online websites which is influenced by some of the factors such as perceived risk, social factors, psychological and personal factors (Horner and Swarbrooke, 2016). These factors formulate the behaviour of the customer towards online purchases when purchasing products from online websites (Joung, 2014). However, these factors were also considered during traditional method of customer behaviour of purchasing but have been moulded according to the online shopping process. Many studies have examined the factors affecting the behaviour of the customers for online purchases independently but some of the important factors were ignored their studies. Therefore, this study aims to identify important key factors of customer behaviour in the context of online purchases when the customer purchases from the online websites.

Organisational Background

The organisations selected for the research are e-commerce websites in China named as JinG Dong and Taobao. Jing Dong is a Chinese e-commerce company which is headquartered in Beijing, China. It is one of the leading online retailers in China having revenue of 181.289 billion Yuan as of 2015. The company is owned by Liu Qiandong in the year 1998.  Taobao is also a Chinese website which is developed for online shopping and is similar to eBay and Amazon, operated in China by the group of Alibaba (Jie, 2010). The website was found in the year 2003 which is a C2C retailer providing platform to the consumers for purchasing products online.

Research Problem

In the contemporary business environment, there are millions of consumers who are opting to purchase the products and services from online retail websites and each of them is a potential customer to the company in enhancing their online sales. Due to the fact, the increasing development of the internet and related technologies have gathered the interest of the retailers and managers of the organisation for selling their products and services through online websites. This has led to a fierce competition in the industry which is evident in the country of China. Since the number of potential customers is increasing constantly, it is necessary for the online retailers to understand the behaviour of the customer regarding online purchases and manufacture products focusing on the trends, taste and expectations of the customers.

In this case, the online retailing is a new medium where consumers prefer to purchase the products and it is diverse from the traditional medium of purchasing the products. Therefore, analysing the factors which affect the behaviour of the customer in online purchases is equally important for increasing the sales of the online retail websites. The factors affecting customer behaviour must be taken into account in order to stay competitive in the industry and meet the consumer demands for the purpose of competing in the online market. This study has highlighted the factors affecting customer behaviour with the online purchases regarding online retail websites.

Aim of the Research

The main aim of this study is to critically analyse the factors affecting customer behaviour on online purchases considering the case of Chinese online retailers Jing Dong and Taobao.

Objectives of the Research

Following are the objectives of the research for the study which are developed in the light of aim of the research:

  • To identify the factors affecting customer behaviour
  • To study the importance of customer behaviour and factors affecting online purchase decision of a customer
  • To critically analyse the impact of factors affecting customer behaviour on online in the context of online retail stores (Jing Dong and Taobao)

To recommend strategies to the online stores Jing Dong and Taobao for improving customer behaviour towards online purchases

Research Questions

Q. What are different factors associated with the customer behaviour?

Q. How the factors the buying behaviour of the consumers when purchasing products from ecommerce websites such as Jing Dong and Taobao?

Q. How customer behaviour can be influenced during online purchases?

Rationale of Research

Customer satisfaction is the ultimate objective of the marketers regarding all products and service types. Moreover, the post purchase behaviour of the consumers is relatively affected by the social factors in which marketers does not have a direct role. The customer behaviour is affected by some factors which influences the online purchases and online sales of the company. However, it is evident that the online website markets is growing rapidly with the passage of time and are offering a variety of products and services to the customers who generally creates problems in the customer behaviour (Chu and Kim, 2011). However, at the same period, marketing experts in the organisation should remain attentive to the promotional messages so it does not create a confounded situation for the customers. Therefore, it is vital for the marketers to identify the factors that formulate customer behaviour and further ensure a positive feeling for the customer towards the specific brand (Mcole, Ramsey and Williams, 2010). This study has shed light on the e-commerce websites to help find out the factors that can affect customer behaviour and strategies to improve the behaviour of online purchases in the context of retail websites.

Significance of Research

The study is significant for the marketers of online websites in different countries to be aware from the consumer behaviour and online purchases in the purchase behaviour. The present study would extend the existing knowledge of the marketers regarding customer behaviour and helps to gain more insights about online purchases regarding online websites. Moreover, with the help of the factors affecting customer behaviour into the study, a holistic understanding of the model can be developed and further provide insights into the consumer behaviour in relation to the online purchases.

Structure of Research

This research is based on five different chapters which will sequence the research in an appropriate manner. The five chapters are explained as:

Chapter 1- The first chapter of this research provides the readers with an overview of the research and further introduces the study demonstrating the direction in which the research was proceeding by the researcher. The first chapter helps the reader to get familiar with the concepts and background related to the researcher and further allows understanding the objectives.

Chapter 2- The second chapter is one of the most important chapters of the research study as it identifies relevant theories and literature that help the researcher and readers to gain the theoretical underpinnings of online purchases and customer behaviour.  This chapter is known as a review of literature which entails theories and models from past researches which have been postulated by the researchers, practitioners and authors. The literature review, however, gives the overview and background knowledge about online purchases and the purchase behaviour of the consumers.

Chapter 3- Chapter three is termed as research methodology which elaborates how the research will be undertaken by the researcher. It provides insights on the philosophies of research, strategies methods and limitations of the research.

Chapter 4- This chapter is also the important chapter of this research as it analyses the data and provide the readers with the survey results.

Chapter 5- This is the concluding chapter of the research which incorporates final conclusion and recommendations to the readers.

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Factors affecting customer behaviour in online purchases: A Critical Analysis of online retail store Jing Dong and Taobao

Questionnaire

The main aim of this study is to critically analyse the factors affecting customer behaviour on online purchases considering the case of Chinese online retailers Jing Dong and Taobao.

  1. Gender
  • Male
  • Female
  1. Age
  • 20– 24 years
  • 25 – 29 years
  • 30 – 34 years
  • 35 – 39 years
  • Above 40 years

Independent Variable: Factors affecting Customer Behaviour

Personal factors

  1. The income of the person influences his buying patterns.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. People prefer to purchase those products online which advocate their role in society.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Purchases from online retail websites reflect a consumer lifestyle.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree

Social Factors

  1. Social class can influence behaviour of the customers on online retail websites.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Friends and family members can influence an online purchase decision of the customers.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Online retail stores motivate the customer to buy the products as it meets their social needs.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree

Psychological factors

  1. The consumer perception towards online products and the brand also influences his buying decision.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Level of motivation towards online products influences the buying behaviour of the consumers.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Online products create a positive attitude of the customers to buy the products from online retail websites.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree

Risk factors

  1. Low risk in the online retail websites can influence the customer behaviour.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Consumer prefers to buy from those online websites which have secured payment system.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. Consumers prefer to buy from those online websites which have less product risk.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree

Dependent Variable: Online Purchases

  1. Online purchases are largely influenced by consumer attitude towards online retailing store.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. The online purchases are influence by cultural and social norms.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree
  1. The performance of the products should meet the expectation of the customers to influence online purchases.
  • Strongly Agree
  • Agree
  • Neutral
  • Disagree
  • Strongly Disagree