Excerpt
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Introduction:
Background of the research:
Electronic commerce or e-Commerce consists of the buying and selling of products and services
over electronic systems such as the Internet and other computer networks. The amount of trade
conducted electronically is remarkably increased with the widespread use of the Internet
(Blackwell, 2006). To facilitate global trade various schemes for transaction of electronic money
have been introduced. Such schemes offer concrete solutions to the risk associated with trust,
information security, international finance, and other factors posing uncertainty. Trust is a major
focus of e-commerce professionals. In traditional trade much of mechanisms for building trust
are related to the form of communication between the participants and costs related to the contact
in person. In case of remote access (in terms of the Internet, for example) many of the traditional
mechanisms for establishing trust between participants exists. Therefore, options to enhance or
introduce other new mechanisms are used for confidence building (Bodenhausen, 2012). There
are different forms of e-commerce. The e-commerce models are:
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B2C - Business to Customer, a representative of which are the classic online stores based
catalogue marketing.
·
B2B - Business to Business, such as when companies integrate their information systems
to automate the exchange of goods and information between them.
·
C2C - Customer to Customer, or client to client schemes where the trade takes place
between users of the platform and the provider only provides the platform infrastructure, often
for a fee.
·
B2G - Business to Government, in which companies offer the services of the government
with the requisite specificity, e.g. transparency (Foxhall, 2005).
With more and more large-scale penetration of the Internet in the world of men, invariably, new
things that make life easier for ordinary users have become increasingly popular. One of these is
shopping online, which saves a lot of time walking around and looking at the shops, saves money
and purchased goods are delivered direct to the door. Consumer attitudes and behaviour have
changed as per the changing retail options. There are some excellent advantages of online
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shopping that have influenced consumer behaviour. Shopping on the Internet makes it easier for
consumers to find products and services and compare them to those offered in other stores
without having a physical presence in the store. Purchased goods are delivered to the specified
location of the client, which saves transport costs. Online store are cheaper than the regular
stores because the Internet does not involve much of the usual costs of rent, staff and other
related ordinary activities. Amazon.com, Inc. is an American company, the largest in the world
in terms of turnover of selling goods and services through the Internet. It is one of the first
Internet-based services, focused on sales of real consumer goods (Muellbauer, 2012). In this
paper, the consumer behaviour will be assessed in order to understand the consumer preferences
and opinions about online shopping (Cline, 2011). For this purpose, the e-commerce company,
Amazon.co.uk has been chosen. Amazon.com, Inc. is a transnational company based in the U.S.,
with core business e-commerce. The company, whose headquarters is located in Seattle,
Washington, is the biggest online store in the U.S. Jeff Bezos founded Amazon.com, Inc. in
1994, while the site was launched in 1995. Amazon is one of the most popular e-commerce
options in UK. Amazon follows the B2C business model and offers 34 different categories of
products to UK consumers. However, it also uses the C2C model and enables customers to sell
old or used products to other customers by using the web portal as a medium. In this paper, the
mobile phones category has been focused upon (Sheth, 2008).
In order to assess consumer behaviour, it is important to understand the purchasing decision of
the customers. A consumer reaches a purchasing decision through different stages based on his
behaviour. These stages have been highlighted as follows:
· Identification of the problem: In this stage, the user finds what need is satisfied.
· Information search / information retrieval: When the user has found that there is a
problem and one of his needs is not satisfied, he seeks information about products and
services that can solve this problem. Consumers take information internally (in memory)
and try to satisfy external demand. Sources of information are personal, commercial,
public and personal experience.
· The internal psychological process: This is the process that is associated with the
information search. This is defined as a process in which the individual receives, selects,
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organizes and interprets the information in order to obtain a meaningful picture of the
world. Perception determines what the user sees and what he feels. It includes
information acquisition and abstraction. Abstraction is the process by which a customer
enters product information in several important concepts (Simmons, 2012).
· Evaluating information / alternatives: At this stage, the user compares the brands and
products that arouse him. User evaluates the alternatives in terms of functionality and
psychological benefits. The price is also important.
· Purchase decision: Once the alternatives have been evaluated, the user is ready to decide
on the purchase, but the desire does not always lead to purchase. To encourage the
consumer intent to purchase, the marketing organization can use a variety of techniques:
opportunities for credit, deferred payment or promotions.
· Assessment after purchase: Here the user evaluates their satisfaction or dissatisfaction
with the purchase (Loudon, 2005).
This paper investigates the influence of e-commerce and related factors on the consumer
behaviour with respect to the purchase decisions of mobile phones. The different factors that
influence the consumer behaviour related to buying mobile phones have been identified in this
research.
Aim and objectives:
In this study, the most important aim is to assess the buying behaviour of the consumers in
context of the mobile phones category of products in the UK web shopping portal of Amazon.
The major objectives of this research are:
1. To analyse the impact of e-commerce on consumers buying behaviour with respect to buying
mobile phones in Amazon UK.
2. To identify and analyze the factors that influences the consumers buying behaviour in favour
of e-commerce through the mobile phones category in Amazon UK.
3. To review the problems related to e-commerce of mobile phones in Amazon UK, which pose
as obstacles to growth of this business model.
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4. To provide recommendations that can solve the relevant issues and increase the sales of
mobile phones through Amazon UK.
Significance of the research:
At present, in the modern business environment, e-commerce is considered to be one of the
competitive concepts. E-commerce plays a significant role to influence the purchase behaviour
of the customers. The development of different factors related to e-commerce has made shopping
convenient for consumers. At present most of the customers are motivated to opt for e-commerce
due to the advancement of information technology and social media. Therefore, e-commerce has
taken the opportunity to establish the customer relationship with the existing and potential
customer groups (Packard, 2007). E-commerce has established a significant influence towards
the consumers buying behaviour with respect to different types of products and services. In order
to understand the future scope of e-commerce, it is important to assess the impact of e-commerce
on customers' buying behaviour. The factors that influence the consumer behaviour in favour of
e-commerce and the factors that go against it, need to be identified and analyzed. This
information is of high academic significance as it can help students of business management
understand the e-commerce business model deeply. This study is highly significant for existing
e-commerce businesses as well as parties aiming to start new e-commerce businesses, as, the
results of this study can provide in depth understanding about consumer behaviour. The results
can be used to design specific strategies that can attract consumers to e-commerce businesses.
Also, the recommended strategies can be used to solve issues related to e-commerce (McNair,
2008). As this study focuses on Amazon UK, the results can provide a detailed understanding of
the e-commerce scenario in UK from the consumers' perspectives.
Rationale of the research:
The reason behind choosing this topic for research is that though e-commerce is a relatively new
concept, it has become extremely successful, especially in recent times. This form of business
has scope for a lot of growth. However, the impact of e-commerce on consumer behaviour is a
bit ambiguous at the moment and there is not enough information about the details of the factors
that attract customers to the online shopping sites. If the factors that affect consumer behaviour
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in this regard can be identified, then, e-commerce businesses can implement appropriate business
strategies to attract customers by meeting their needs (Schwartz, 2004). Thus, there is a need for
understanding e-commerce from the point of view of consumers. In this paper, the factors that
influence consumer behaviour positively as well as negatively have been identified and assessed
from the consumer perspective. The reason for choosing Amazon UK for this research is that
Amazon is the world's biggest e-commerce business and is a market leader in UK. Hence, it can
represent the global e-commerce scenario (Schiffman, 2009). The reason behind limiting this
study within the UK market is that e-commerce is quite popular in UK, and hence, the UK
consumers can represent the consumers from all parts of the world. Thus, the results of this study
can be valid globally based on representation.
Limitations of the research:
The limitations of the research primarily involve the limited time period, self funding and finally,
covering large area of the topic within the given time period. The broad area of research problem
has been covered within the limited timeframe. In addition to this, it is a self funded project and
it was not possible for the researcher to obtain more resources to establish the secondary sources
of information in a better way. Also, the research primarily focuses in the UK market. Though
the UK consumers are representative of the global consumers, factors like cultural gaps, impacts
of background, religion, etc. on consumer behaviour, are obstacles. Thus, the results of the
research might not be perfectly valid universally. Also, the research focuses only on Amazon.
The other e-commerce options involving other business models have not been covered in this
research. For example, the B2B and B2G models have not been focused upon. Thus, this
research does not cover e-commerce as a whole.
Structure of the dissertation:
Chapter 1:
Chapter 1 is the introductory stage of the dissertation. In this chapter the researcher has focused
upon the background of the study. In addition to this, the researcher has reflected upon the scope
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and rationale of the research work along with the research objectives and research questions.
Therefore the chapter will give a primary idea towards the details the research work.
Chapter 2:
Chapter 2 is based on the critical review of the literature established by the previous researchers.
The literature in this area has been previously established based on the research problem and the
research issue. The chapter will have significant impact during the research findings and
analyses.
Chapter 3:
Chapter 3 focuses upon the research methodology needed to support the research findings and
analysis. In this stage, the area of research outputs, research philosophy and the research
paradigms have been highlighted. This chapter is an overall research guideline that has been
followed to obtain the research results.
Chapter 4:
Chapter 4 is the data analyses and investigation chapter. In this chapter the researcher will
analyse and interpret the gathered information obtained from the target group of responders in
order to support the research work and attain the research objectives.
Chapter 5:
In this chapter the researcher will tally the research objectives with the findings and analysis
gathered in chapter 4. In addition to this, the researcher will reflect upon the discussion raised
under research issue.
Chapter 6:
This is the conclusion. In this chapter the researcher will conclude the research based on the
research findings and analysis. In addition to the conclusions, the research will also provide
recommendations on the basis of the findings generated to improve the area of the research
problem. The researcher will also focus upon the future scope of the research.
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Literature Review:
Its product range has been expanded to include more options later, such as the CD - and DVD
discs and computer programs.
Amazon sales range covers 40 categories of products from books to jewelry. The company also
owns movie database IMDb's. It was one of the first e-commerce companies. Its database and
service capabilities are often pioneers, and, inter alia. The product details page shows the
message: "the others who bought this product also purchased these products". This concept of
cross promotion of products is derived from Amazon.com. The company was founded by Jeff
Bezos in 1994, when it was called Cadabra.com. The name was abandoned as soon as it
resembled a 'carcass'. Amazon.com started its business in July 1995 (Schiffman, 2009).
Amazon's business strategy at the time was unusual, it is assumed to achieve a profit in the first
four or five years. The company increased its business at a steady pace, and non-profit started to
be evident only after the IT bubble. In 2009, the company's total business was $ 172 million at a
loss. In 2006, the figure was $ 1.8 billion, and is expected that the 2010 earnings after the
number is positive. U.S. Time magazine called Bezos'n 1999 Person of the Year in recognition
of the company's achievements in e-commerce to become popular. The company announced e-
books, the Kindle reader in 2007, and the Kindle tablet PC in 2011 (Shell, 2009). The company
started in the United States in 2012, and entered the book publishing industry, in which the
Director has long worked. Amazon is said to attract other publishers' success in quite an
outspoken manner. It also started business in the UK, with a particular focus on e-book.
The company also has offices in the UK, Canada, China, Japan, France and Germany. One of the
services offerred once registered can enable people make purchases at the same time in any
country in the Amazon. Amazon's service has the opportunity to "browse" some of the books and
make them searchable. The electronic commerce involves Internet and computer networks - for
sale, purchase, or exchange. Those sites that are selling the main profile of certain articles, are
called web store or eStore (Other known names: Web shop, web store, online store, online
stores). In the development of e-commerce, computing and other technologies have allowed
options such as electronic payments, online marketing, processing of online transactions,
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electronic data interchange business between and automatic inventory control technologies
(Shell, 2009).
The e-commerce in general is based on the Internet connection between the seller and the buyer.
It includes at least one of the stages of the buying process, but may also include other
technologies, such as. e-mail, mobile computing devices, phones (Solomon, 1994).
Consumer behaviour:
Consumer behaviour is an interdisciplinary field that deals with the study of when, why, how and
where people buy a product or not. It combines many elements from various fields of
psychology, sociology, social anthropology and economics. The study of consumer behaviour
attempts to understand the processes of decision-making by individuals and groups. It studies the
individual demographic characteristics and behavioural characteristics of people wanting to
understand consumer desires. The main task of the study of consumer behaviour and how they
affect nearby establishment is to assess individual groups such as family, friends and society as a
whole. The study of consumer behaviour is based on the behaviour of consumers when shopping.
The customer plays three different roles of user, payer and buyer (Daisey, 2012).
Maslow's hierarchy:
Maslow (1954) cited in Olsen (2008) for focus upon the hierarchy of human needs and
requirements in order to explain the reason behind the particular needs and wants in practical
time period. According to the motivation theory of Maslow it is also the people try to satisfy the
fast need starting from the bottom of the pyramid. In this stage, Spector (2008) stated that the
consumer doesn't have any clear explanation regarding the following of the Maslow's hierarchy
need pyramid.
According to Marcus (2004) the consumer's needs and requirements are based on several
characteristics. In this situation the needs and requirements of the consumers cannot be
manipulated by the retailers. The consumers need exists before the market and redeem the
customers. According to the previous researchers, the consumers are nearby fully satisfied rather
than temporary basis. The customers revisit the online website on the high Street retailers will be
their changing needs with the time and the environment. The consumers are not always happy
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with the same needs and requirements as the needs and requirements of the consumers are
changing in a continuous process due to the advancement of information technology and social
media. In this stage motivation is considered to be an important strategy to fund the organisation
through which it is possible for the organisation to satisfy the consumers buying behaviour. By
adopting appropriate motivation policy it is possible for the online retailers to attract and
motivate the customers towards their specific branded products and services. In addition to
influence the perception and belief of the consumers it is essential for the marketers to deal with
the requirement towards the specified products and services. In addition the online retailer needs
to take into account that the impression of the customers is the final one. In addition to this,
Friedman (2004), stated that the perception and belief of the customers using the online shopping
is considered to be an important determinant. Through perception it is possible for the customers
to select, organise and interpret information to meaningful picture. In this case there are three
perceptual process involved such as selective attention, selective distortion and selective
retention. The selective attention can be defined as the tendency to which it is possible for the
people to screen out most of the information they are exposed. Moreover the selective distortion
can be defined as the tendency through which the customers interpret information which they
strongly believe. The selective retention focuses upon the tendency to remember what finds
based on the brand that products, (Brandt, 2011). On the other hand it is a risk for the retailer to
launch a new product without testing it which may create negative impression in the mind of the
customers. Therefore the improvement and development of the product is considered to be an
important element to influence the buying behaviour of the customer. In this stage the past
experience also plays a significant role to focus upon the changes in individual's behaviour.
Therefore the past watches experiences influences the future behaviour. In this stage in the
consumers are not satisfied with the specified branded product or services then there is no chance
for the customers to purchase the product. Moreover the product knowledge is also considered to
be an important element upon which the perception and believe of the customers established.
Therefore from the discussion it can be observed that the consumers buying behaviour depends
upon the nature and characteristics of the products and services along with the retailers attitude
towards the customers. It also depends upon the each in each and every individual customers and
their buying behaviour process (Brandt, 2011).
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Business concepts of e-commerce
According to Isaac (2010), e-commerce business is established on the basis of the advancement
of information technology in order to merge with the new economy. In order to focus upon the e-
commerce it is important to focus upon three central platforms below each develops the concept
of electronic business process. It mainly includes e- shopping, e-marketplace and e procurement.
E shopping in marketplace is based on the electronic sales and commerce. On the other hand you
procurement is based on the purchase process of the products and services. In addition to that, it
focuses upon the adverse area of e-business and each community. Each community enables to
establish digital, negation between human beings and institutions through the establishment of
digital network. In this stage that a company in the balls the digital cooperation between
companies through a detailed network. In addition, McCracken (2012) stated that the e-
commerce also focuses upon the buying and selling of information, products and services
through the usage of computer networks. According to Birchall (2009), there are four typical
ideas of business concept which includes content, commerce, context and connection. In addition
to the e-commerce also supports the business transaction or word a digital infrastructure. The
prime business concept of e-commerce is to introduce the products and services through the
established website. In addition to the website also provides significant information for the
customers based on the product distribution channel. According to Kawamoto (2007) it is also
that to the establishment of efficient website it is possible to focus upon digital products,
communication and transaction functions. Therefore the electronic commerce has the potential to
establish business to business and business to consumer relationship prospect to the efficient use
of the retailer.
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Source: Spiro, J. (2003). "The Great Leaders Series: Jeff Bezos, Founder of Amazon.com".
Inc.com.
Stages in the process of consumer decision making:
Before and after making a purchase, a consumer will perform a number of processes that
underlie decision-making, namely:
· Introduction of the problem (problem recognition): Consumers will buy a product as a
solution to the problems it faces. Without the introduction of the problems that arise,
consumers can not determine which products will be purchased (Kawamoto, 2007).
· Information retrieval: After understanding the problems that exist, consumers will get
motivation to seek information to resolve existing problems through the search of
information. The process of information retrieval can be derived from the memory
(internal) and based on the experience of people other (external) (Isaac, 2010).
· Evaluating alternative: After consumers receive a variety of information, consumers will
evaluate the alternatives that exist to address the problems it faces (Marcus, 2004).
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· Purchasing decisions: After evaluating several alternatives consumers will strategically
make a purchase decision. Sometimes the time it takes between making purchasing
decisions by creating a purchase is not the same because of the other things that need to
be considered (Isaac, 2010).
· Post-purchase evaluation: Post-purchase evaluation is an evaluation process that
consumers do not just end at the stage of making a purchase decision. After buying a
product, consumers will evaluate whether the product is in accordance with expectations.
In this case, satisfaction and dissatisfaction of consumers occurs. Consumers will be
satisfied if the product is in accordance with expectations and will further increase the
demand of the product in the future. Instead, consumers will be dissatisfied if the product
is not in accordance with expectations and this will decrease consumer demand in the
future (Marcus, 2004).
Significance of pricing policy in influencing customer behaviour:
In addition to measures of customer satisfaction and customer loyalty Amazon needs to focus on
customer orientation too. In most forms of business programs for customer retention, the focus is
on the production of regular customers from walk-in customers. Classic initiatives for customer
loyalty, such as bonus points and discount programs are now supplemented by psychology-based
customer relationship management. Psychological customer loyalty measures that prove to be
effective and provide more customer-opportunity for customer loyalty will play only a minor
role in the classic bonus programs in the future. Considering the fact that the man per se is not
(or only to a limited extent) rational and decides to evaluate customer loyalty through the pricing
policy as an efficient means of little long-term customer loyalty. Under the acquisitive potential
is the ability of the company to retain customers (Isaac, 2010).
After reaching the height of this potential, the individual configuration of the price-demand
function depends. The acquisitive potential occurs in conjunction with the price-demand function