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Table of Contents

CHAPTER 2: Literature Review

Introduction

This chapter provides the overview of the concepts and theories regarding customer behaviour which are discussed in the light of different authors and practitioners. Moreover, this chapter also aims to identify key concepts regarding online purchases in the support of online retail stores which influences the behaviour of the customers. Additionally, the theories identified for this chapter has derived the factors affecting customer behaviour and online purchases. The chapter concludes with the discussion of theoretical and conceptual framework

Customer Behaviour

The customer behaviour have been researched by a number of practitioners and scholars and find it important because it provides insights on the study of the consumers which the organisations want to target in order to enhance their online sales. In the light of Chu and Kim (2011, p. 47), customer behaviour is regarded as the branch of marketing which deals with the study of various stages of customer behaviour in purchasing products and services from different organisation and further studies the behaviour associated with the purchases. The customer behaviour is necessary for the managers to study in order to stay ahead in the competition because the behaviour of the customers changes continuously as the new product introduced in the market. However, the behaviour of the customers is largely influenced by the TV advertisements and online promotions and creates the image of the company in the minds of the consumers.

As stated by Verhagen and van Dolen (2011), customer behaviour is largely influenced by the online promotions and advertisement which are aimed to attract the attention of the customers and further stimulate their interest in the particular products. However, they require additional information about the products and services offered to them in which they search for different channels and mediums to get the information about the products. In this context, product reviews and word of mouth helps the customers in buying products and services from different online retail websites (Wilson, 2012). Furthermore, the customer will seek for the products and services which meet their expectations and have the interest in that particular product. The emergence of the internet, however, has played a significant role in formulating the behaviour of the customers as customers find useful information about the brands on social media platforms and other websites which are convenient for the customers to look at. On the contrary side, some customers still feel uncomfortable to buy the products and services online due to the personal, psychological and risk factors which is one of the main reasons that impedes the consumers to buy the products online.

It is highlighted by Hsin, Chang and Wang, (2011, p. 333), for the purpose of formulating customer behaviour, it is necessary to strengthen the relationship with the customers in order to increase the online sales and attract the customers towards the particular online retail websites. It is apparent that there is no face to face interaction of the customers with the company representatives as the whole procedure of buying and selling is carried out on the online websites (Solomon, 2014). Furthermore, the behaviour of the customer is largely dependent on the demographic characteristics which is driven by the consumer shopping, internet knowledge and orientations. 

It analysed by Hollensen (2015), that as the passage of time, customers are shifting from traditional mode of purchasing products to online purchasing because online retailers are providing a number of websites in which consumers purchases the products. For this purpose, retailers are formulating different strategies in order to facilitate the customers with the online purchasing from their online retail websites and providing them with ease to do shopping without visiting the physical stores (Rahbar and Abdul Wahid, 2011, p. 73). In addition to the above statement, the customer behaviour is mostly formulated with the availability of their desired products on the websites. However, the online purchasing has mainly influenced the factors which are mentioned in the next section by the researcher where factors are highlighted from the study of different authors. 

Factors affecting Customer Behaviour

Personal Factors

It has been examined that individual personality can change due to several factors such as income which has a great impact on the purchasing behaviour. Each individual has their own set of personality traits and characters that affects the buying decision of the customers. Due to the variations in the personality, customers hold different perception towards the type of products while purchasing from online retail stores (Powers and Jack, 2013). It has been identified that due to changes in the lifestyle and personality, the consumers mostly purchase products from online retail stores websites. With the increase in the trend of online retailing, there is an impact which leads to discomfort, uncomfortable feeling and anxiety because of risk factors in the online purchases that exist when the customers has to choose one alternative with the benefits and features and that requires to give up the appealing factor and features for other alternatives. The individual personality has a significant impact on the selection of the online retail store (Imam, 2013). Personality affects the customer behaviour when they seek further information from other online retail stores regarding the features and benefits that they have forgone.

Social Factors

It has been examined that social status also impacts the decision of a consumer while purchasing a product. People belong to different backgrounds and have different social class from low to high. According to the research, it has been identified that people have different buying attitudes according to their status and backgrounds (Kuhl and Beckmann, 2012). People who belong to middle class would buy a product or service that matches the level of their earnings. While purchasing something, people would contemplate that either the product is cheap enough to buy or not. If it matches to the planned budget, only then people would purchase it. Due to the social factors, the consumer behaviour occurs while making a decision regarding purchase. The customer behaviour is generated due to difference in belief and attitude.

According to the research, it has been identified that the buying behaviour of the customers are similar in the same level of social class. There are many elements that can change the social class of the customers such as income, education and wealth. The consumer behaviour and the post purchase decisions are affected when they receive information from their family and friends and are likely to occur when they encounter the information from competitive online retail stores that offers more features and benefits (Shobeiri, Mazaheri, and Laroche, 2015, p. 175). Online retail stores often target people with the products and services according to their social class and the consumers make buying decisions accordingly.

Psychological Factors

It has been identified that consumer’s attitude has a significant impact on the behaviour of the customers. The attitudes of the customers are different for the products that they purchased from online retail stores. It has been identified that the attitude of the individual customer changes with time which creates a direct impact on the consumer behaviour (Antoniou, Doukas, and Subrahmanyam, 2013). It has been found that the attitude of the customers, after the post purchase, represents the positive and negative feeling due to conflicts in the perception after acquiring further knowledge about new offering from several online retail stores. The attitudes of the customers can lead to positive and negative behavioural intention and has an impact on the consumers buying behaviour.

Cultural Factors

It has been examined that cultural factors emphasise on the values and belief that develops the opinions and perception of the individuals. These factors have an impact on the customer behaviour. According to the research, it has been found that cultural factors can lead to online purchases of the customers when they encounter people and exchanges ideas that provides them the information regarding several alternatives that makes it difficult for the customers to make decisions (Cheah, Phau, and Kea, 2016, p. 190). The consumer buying behaviour is affected by the elements of culture such as value and beliefs. The buying behaviour of the consumer varies due to cultural differences and people who belong to different cultures alter their buying behaviour and this has an impact on the customer behaviour due to conflicts and cultural differences that affects the brand image of the online retail stores.  

Risk Factors

In the light of Kim (2012, p. 374), risk refers to the amount and nature of risk associated with the purchasing of products through online websites. Moreover, the perceived risk generated by the consumers formulates their online purchase decisions regarding the websites provided by the online retailers. There are different types of risk associated with the online purchasing because of which few of the consumers prefers to purchase the products and services online. It is suggested by Zhou (2011) that consumers prefer to buy products from e-commerce websites so it does not require their physical inspection which is one type of risk associated with the product purchased from online websites. If consumers experience higher perceived value towards the online purchases of the products and services, they might shift to brick and mortar retailer for the product purchases. Similarly, lower risk can lead to a higher propensity of shopping online. It is also evident that perceived risk exists in the online shopping due to the failures of technology or human error (Javadi, 2012, p. 81). Moreover, the most important risk associated with the online purchases is the financial risk and product risk as the consumers cannot feel or touch the product when purchasing it from online websites. Furthermore, the product quality can be deteriorated during the process of delivery of the product to the customer. In addition to the above statement, there is a high level of uncertainty which has surrounded the online purchases and significantly influences the perceptions of the customers regarding the perceived risks. 

Innovativeness

The innovativeness is demonstrated as the degree to which the customers are willing to adopt innovation within the system of online retail websites. Most of the customers continue to shop in the physical stores due to the fact that they are no aware of the technological components and e-commerce websites. Moreover, the internet and online shopping portals provide the consumers with a wide range of offerings of product and services and are often required to move out from their normal shopping routine. It is enlightened by Wilson (2012), customers shopping online are required to learn about new technologies and revolution of the internet in order to improve their searching skills, evaluating and acquiring products and services from different online websites. In addition, the consumers who prefer shopping from specific stores over online retail stores do not perceive shopping online as the mode of convenience. A research conducted by Solomon (2014), reveals that innovativeness in the online shopping is derived from the function of attitude towards the online purchases and individual characteristics. Furthermore, the customers who are innovative are more inclined towards trying new experiences and activities. Therefore, the adoption of shopping online is the representation of the innovativeness of the individual’s characteristics and also presents the propensity to purchase the products online.

Online Purchases

According to Verhagen, and van Dolen (2011), online purchases is regarded as the form of e-commerce which enables the consumers to purchase the products and services from the online websites using a web browser. Consumers find the products which meet their requirements and expectations by visiting the website of the online retailer or through searching different retailers by using shopping search engine. The shopping search engine displays the availability of the products and their pricing at different online retailing websites. In the present business environment, the consumers are facilitated by most of the organisations to purchase their product from their respective online websites by using a range of different devices such as computers, laptops, tablets and smartphones.

The online stores enable the customers to use different features available on the website for the purpose of finding their preferred brands or items. However, the customers should have access to the internet and a valid payment method which can complete their transactions for instance credit card, debit card or should be using services such as PayPal. Moreover, the purpose of creating online platforms for the shopping is to provide convenience to the customers as online retail stores provide services to the customers 24 hours a day were the customers can access the websites anywhere they want (Wilson, 2012). Moreover, it also provides information and reviews to the customers regarding their preferred products or can get aware of the product through the product information given on the side of the product. Apart from the online reviews, peer recommendation also plays an important role in influencing the behaviour of the customer towards the purchase of online retail websites. The figure below presents the online retail websites screenshot which helps the readers in better understanding of the online websites.

Literature-review-sample-picture-13

Behaviour of customer affecting online purchases in online stores

The behaviour of the customer directly influences their online purchases as they can find same product at different websites without visiting any store. However, their behaviour is largely affected by the convenience factors which ultimately influence the consumer buying behaviour in the case of online retailing industry. The customers often purchase products form online retailing store and it’s a common approach that customers often evaluate the efficiency and features of the product (Antoniou, Doukas, and Subrahmanyam, 2013). The comparisons are carried out in terms of overall performance that should meet the expectations of the customers. When the requirements of the customers are not met, it leads to negative perception and attitudes and changes in the consumer buying behaviour. It can be stated that online purchases are directly related to the consumer buying behaviour and this lead to the significant change in the customer’s attitude and perception. The attitude and perception towards the offering of the retails store changes when the risks are associated with the products and services offered on the online websites. The changes in the factors such as consumer attitudes and social class affect the behaviour of the customer and that ultimately affects the online purchases in online retail stores.

Theoretical Framework

Theory of Planned Behaviour

It has been identified that attitude and beliefs of an individual are directly related to consumer buying behaviour (Solomon, 2014). According to the research, the consumer’s attitude towards any product can be positive and negative and they are associated with the behavioural intention of the customer’s. It can be stated that the positive attitude and perception towards the products that are offered by online retail store has an impact and can shape the buying process of the consumers. The attitudes of the consumers towards the brand and its product are determined by their belief and the information which they seek from online advertising and digital marketing. The consumers perceived that the products provide satisfaction when the performance and he core benefits of the products meet the expectation of the customers (Joung, 2014, p. 690).

It has been assessed that when the products and services of the online retail stores fails to meet the requirements, the purchase behaviour occurs. In the case of high involvement products, the customers often evaluate and conduct comparison after their purchase decisions (Solomon, 2014). It can be stated that when the customers encounters the online purchases, the level of anxiety increases due to discomfort feelings. This leads to dissatisfaction and it force the customers to change their attitudes towards those products, the negative attitude affects both the consumer’s beliefs and behavioural intention that affects the consumer buying behaviour.

Theory of reasoned action

According to the research, it has been found that human actions in terms of purchase intention and consumer’s buying behaviour are determined by the attitude that shapes the consumer’s behaviour. The positive and negative attitude can change the behavioural intention of the consumers (Marciniak and Gad Mohsen, 2016). After the purchase, the attitudes of the consumers can either be positive and negative and this determines the buying behaviour of the customers. The negative attitude occurs when the customers encounter post purchase.

It can be stated that the consumer buying behaviour are determined by the individual beliefs and attitudes (Marciniak and Gad Mohsen, 2016). When the customer’s seek information that inform them about the alternatives, the purchase behaviour occurs and this affects the consumer buying behaviour and the negative attitude and perception are developed against the product that are acquired from online retail stores.

Conceptual Framework

Literature-review-sample-picture-14

It has been examined that the personal factors can affect the customer behaviour and it lead to significant impact on the online purchases in retail stores. There are differences in the personality trait and the individual characteristics. Due to these factors, there are variations in the consumer buying decisions. It has been identified that there are several factors such as social class, individual personality, attitudes, beliefs, perception and cultural factors that affect the affects the customer behaviour in online purchases.

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Questionaire

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.

Demographics

  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