research paper final 1

7/31/2019 Research Paper Final 1

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Consumers Online Search and Purchase

Behaviour & the Utility of Recommendation

Agents in Pakistan

Syeda Sara Tazeen Jaffer

Department of Finance, College of Business Management, Institute of Business Management,

Karachi, Pakistan

[[email protected], [email protected], 0321-2570366]

Khadija Reza

Department of Marketing, College of Business Management, Institute of Business Management,

Karachi, Pakistan[[email protected], [email protected], 0333-2142144]

Plagiarism detected through Turnitin = 5%


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Consumers Online Search and Purchase

Behaviour & the Utility of Recommendation

Agents in Pakistan

Syeda Sara Tazeen Jaffer

Department of Finance, College of Business Management, Institute of Business Management,

Karachi, Pakistan

Khadija Reza

Department of Marketing, College of Business Management, Institute of Business Management,

Karachi, Pakistan

Keywords: Recommendation Agents, Online Shopping, Online Search, Online Purchase Behaviour, E-

commerce, Consumer Behaviour

E-commerce has brought a vast amount of opportunities for the

establishment of different channels for business-customer interaction and

avenues for sales. The fact that, purchase empowerment is now just a click

away has emboldened businesses to provide ease of purchase and home

delivery services to their consumers on the web. These interactions between

consumers and organisations may arise from search for information

regarding the organisation/product, social networking websites, purchase

This paper is about consumers online search and

purchase behaviour in Pakistan encompassing 350

participants. Since the trend is towards consumers

shifting to online research and shopping. Thus severe

competition lies in the field of E-commerce for all existing

business and new entrants. Due to which the consumers

get overloaded with information causing confusion and

frustration. The aim of this paper is to find out the utility

of a recommendation agents in Pakistan. The

recommendation agent will take the consumers product

requirement details/preferences and pick out the most

suitable options for the consumer out of the companys

complete product suite. This will help the consumer with

their search by short listing the products for them as per

their preferences making the actual purchase decision

less complicated.

Abstract

Introduction


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intention or participation in a

Mobile phones

fast access to o

on providing th

becoming a fast

Hair and Clark

available towar

interesting and

the actual buyin

further provides afresh, the

on OCE. It helps in the rec

consequences of the OCE and

Rose, Hair and Clark 2010

activities of Online search a

trust of the online environme

Comparison of the traditional face-to-face

Personal contact H

Information Provision V

Time Period for interactions

Brand Presentation R

between an online and offlin

pertaining to the degree of

enables decimation of very d

whereby many visual, audio

availability of purchase whe

internet cafe. The interaction

of the organization wherea

compared to the experience

Extracted from Rose, Hair and Clark 2010

Extract from Rose, Hair and Clark 2010 Int

ANTECEDENTS

1. InformationProcessing

2. Perceived ease ofuse

3. Perceived

usefulness

4. Perceived Benefits

5. Perceived Control

6. Skill

7. Trust Propensity

8. Perceived Risk

9. Enjoyment

EXPERIEN

1. Cognitiv

2. Affectiv

LiteratureR

eview

ny other online pursuits.

have taken us a step further by providing

ganizations via internet. Most organization

ir products to consumers through different

trend in the sub continent to have this acce

2010). It further provides a review on

ds understanding of the different causes

effective Online Consumer Experience (OC

g experience and everything related in that

nderstanding towards eventual impact dif

gnition of the antecedents leading to OC

leads towards developing a framework for

further discuss measuring website perfor

d purchase, considering factors like intern

nt, risk of online buying and perception of c

erses the online customer contexts

ffline Context Online Co

igh to Medium Low

aries in intensity over different media Intensive

ictated by the organization Dictated b

anywhere.

ange of tangible devices used to present the brand Audio-visu

The

kee

e customer experience, the main point of

personal contact. The online context of cu

etailed information which may be lacking in

r paper aids may be required. Another fac

rever you are, in the confines of your h

of the brand with the consumer is rather li

s no such limitation exists online. Howe

hat a consumer may have while feeling theit, a factor

missing in t

The paper

positive O

customer

repurchase

and the

through b

website

International Journal of Management Review 2010

ernational Journal of Management Review 2010

E

e State

State

CONSEQUENCE

1. Customer

Satisfaction

CONSEQUENCE

1. RepurchaseIntention

Page 3 of 16

n even easier and

today are focused

web apps and it is

ss on the go (Rose,

ifferent literature

and effects of an

E) keeping in view

context. The paper

erent factors have

, followed by the

uture testing.

ance and linking

et experience and

stomer services.

text

the customer. Anytime,

al

extract gives a

comparison

hich is the factor

stomer experience

an offline context,

tor is the ease and

me or a crowded

ited to the timings

ver, it cannot be

product or testinghat is distinctively

e online context.

concludes that a

CE will lead to

satisfaction and

from a website

way forward is

etter and easy

navigation,


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development of OCE literature consistently with technological developments.

Keeping in view the study on OCE, we now review in detail the Decision Making process for

the consumer through the Engel-Kollat-Blackwell (EKB)modelwhich discusses the five-stage

core processes including problem recognition, search, alternative evaluation, purchase

choice and outcomes. There are many external and internal factors that affect the decision

making process such as socio-economic factors, online atmosphere and environment,

individual and cultural factors. The model adapted from the EKB model and formulated by

Darley, Blankson and Luthege 2010 is appended for better understanding. The focus of the

article has remained on external search, behavioural intentions, individual and online

environmental factors. The paper gives much breadth for future research on the topic. verall

purchase decision is likely to be affected by the usage behaviour of the consumer along with

the other factors discussed earlier.

Decision Process

Belief

Attitudes

Intentions

Problem Recognition

Search

Internal

External

Alternative

Purchase

Outcomes

DisinvestmentDissatisfaction/

Satisfaction

ConsumptionCognitive

Individual

Characteristics

Motives Values Lifestyle Personality

Social Influence

Culture Reference Grp Family

Situational and

Economic Factors

Online Environment

Website Quality Website

Interface

WebsiteSatisfaction

WebsiteExperience

External Factors

Engel-Kollat-Blackwell (EKB)modelExtracted from Darley, Blankson and Luthege 2010 Psychology and Marketing 2010


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The geographic proximity on a purchase decision is discussed in detail by Janakiraman and

Niraj 2011 gives us an interesting perspective on how online shopping has become an easy

way of accessing products across the globe. It is also imperative for businesses today to be

empowered enough to cater to consumers world over. The paper is a good perspective on

how this geographical proximity being a limiting factor earlier in the past, is now strength asbusinesses strive to create their customer base in far flung areas of the world.

According to Poddar, Mosteller and Scholder2009, the enhancement of the aforementioned

online buying capabilities of consumers has also increased the concerns pertaining to online

privacy and the usage of data for the purposes of building stronger relationships. It is due to

this concern that consumers end up falsifying information asked by online websites relating

to personal detail, likes and dislikes etc. It is a struggle between gratifying the firms desire

for correct and complete information against their own desire for privacy in the said

relationship. The cost of filtering the correct information from the falsified information isquite high and it is difficult too. According to Krill 2000 75% companies in the United States

are unable to effectively use the Consumer Relationship Management systems to create

comprehensive and accurate profiling of consumers. Furthermore, consumers tend to

create false identities or the so-called Guerilla Tactics. It is due to their feelings of losing

control of their own data while providing information online. According to the paper, it is

imperative for business to create an image of better services based on information

exchanges and an impeccable reputation to extract more truthful information.

All consumer behaviour and the interrelated factors of online search and ease of purchase

all meet at the point of our research objective which is to provide some sort of guidance to

the consumer with the help aides. Willemsen et al 2011 discusses the research on the

importance of an expert providing the information and the tendency of individuals to then

believe this information and utilize it to make informed decision. Likewise if the information

is shared through a source that cannot be taken to be credible and does not fall in the realm

of expertise on the topic, it might as well be taken lightly and may have little weight in the

subject decision. The information provided by an expert is automatically taken as if it was

authentic, and has significant weight on the brand attitudes, purchase intention and

behaviours of consumers.

Gen Su, B. Comer and Lee 2008 gave an interesting perspective on creating such an expert to

provide guidance, suggestions or recommendations to consumers while they collect

information for their respective purchase decision. The concept of Recommendation agents

(RA) is rather common abroad but has not been explored in the Pakistani markets. These

RAs can be an excellent solution for the information overload that some consumers tend to

avoid and therefore end up making weak purchase decisions. It is a thin line as consumers in

most cases may consider that the information provided is too much or too little for an

informed decision. A RA would provide a solution to consumers by providing information in

the manner that is not overloading and that which is relevant to the needs of the consumer.


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RAs tend to provide the data in a manner which increases consumer processing capacity for

an informed decision. These may be embedded in the website of the retailer or may be

active as a separate website for the purpose with respect to certain products or services.

According to the classification by Gen Su, B. Comer and Lee 2008, there are two types of

RAs, attribute-based and benefit-based. Attribute-based RA focus on the relative advantage

of a product features whereas benefit-based RA focuses on benefit of each product feature.

The difference of these two types is the degree of specificity of each. Attribute-based RAs

tend to be more sophisticated as compared to benefit-based RA in terms of an informed

decision.

Gen Su, B. Comer and Lee 2008 feel that there are two types of theories underlying the

framework of their study. These include the Cost-Benefit Theory and the Value-Percept

Diversity Model. The factors pertaining to the costs of information collection for purchase

decision making, include consumers assessment of the monetary expenses, physical efforts,

psychological strain etc. Whereas the benefits of the same include increment of utility and

value addition to the decision making process. Similarly Value-Percept Diversity Model

dictates that the satisfaction is a result of cognitive evaluation process. It basically means

that if the cost of the product (service) remains the same but the overall benefit increases

then the customer would be satisfied. On the flip side, if the benefits remain the same but

the costs increase then the customer would go less satisfied.

Therefore the concept of RA tends to create a more satisfied buying decision. Consumers

tend to find important implications with respect to an electronic RA, such as influence ontheir perception of website attributes, switching of relevant dimensions of services quality,

change in quality of their decision and efforts by RAs towards improving their buying

experience.

Different types of RAs discussed earlier were attributes-based and benefit-based. This

classification can be further broken down into RAs that not only give you results based only

attributes, they also take into consideration the weights of the attributes as per the

consumers specifications. These are further considered to be beneficial by consumers as

they reduce cognitive costs of choosing between different alternatives.

Recommendation Agents are not an aim to provide an advice to a consumer, the aim of RAs

is to give a comprehensive overview of all the options and to ultimately indicate the best

one through its own assessment results.

The application of such RAs can be for an array of products and services, be it apparel and

clothing or dining services.


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HA0 = Consumers are not open to taking guidance from an electronic aid

while Shopping online

HA1= Consumers are open to taking guidance from an electronic aid while

Shopping online

HB0 = Consumers are not inclined to Recommendation Agents providing advice on weighted

product attributes

HB1 = Consumers are inclined to Recommendation Agents providing advice on weighted

product attributes

The sample that was part of this

survey included 350 individuals, out of

which 75% were males and 25% were

females. This is indicative of the active

users of internet that we have been

able to tap are males and therefore

the conclusions that we may draw are

more skewed towards their online shopping habits.

Almost 97% of the total individuals surveyed are

between the ages of 20-40. This is the most active

generation on the internet, with the appetite for

such products. Individuals in the age groups of 41-

60 are not too open to change and may find it

difficult in adjusting to the options of online

shopping as opposed to the traditional brick and

mortar option. Further research work can be done

on these untapped age groups.

Usage of Internet is immensely common

and since the subject survey was being

conducted online, it was bound to be

filled by individuals who frequently use

the internet for personal and

professional purposes. The data is

indicative that the segment that is being

studied in this research paper is well

aware and educated regarding the internet.

Results

Hypotheses


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Among those who have

become a part of this survey

55% are patient buyers. It is

rather common for

consumers to put somethought, effort and research

in their buying decision,

hence the results showing

the maximum number of

participants to be patient

buyers. Impulsive buyers are

rather less with only a 16%

and Analytical buyers at 29%.

Since online shopping is not a common idea in the South Asian region, only 51% of the

individuals sampled had ever made a purchase online. The reasons for this could include the

lack of buying power and technological

backwardness. Furthermore, lack of trust for

online, faceless transaction is something that will

be achieved over time and sudden acceptance of

the same cannot be expected.

The factors that promote Online Shopping for

consumers include the broad category of

Convenience which was selected by 200

participants of the total 350 surveyed. The more

specific factors promoting Online Shopping include Home Deliveries, Return and Warranties,

Availability of Information & Choices and Ease of Payment. Home Delivery is considered to

be the most important factor among given factors for the promotion of Online Shopping.

Of all the factors given to the consumers, Home Delivery has been picked as the most

motivating factor next to the broader scope of Convenience. The other factors are

somewhat in equal weights.

Tracing back to the real motivation,

behind a purchase decision which

leads to online shopping, includes

Variety, Price, Quality and Branding.

The factor of Quality remains the

most important factor for consumers.

When making a purchase online or

offline in the physical world,consumers want to make no compromise on Quality. For this reason E-Commerce based


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companies have to take an even more

dedicated approach at providing Quality in

their products and services. The competition

is fierce and a slacking approach can prove to

be detrimental for the company.

Consumer attitude towards their shopping

experience includes the factor of seeking

guidance from peers, family or friends. In our

research we have come to find that 63% of

our sample is open to taking suggestions and

advice for their shopping decision, which sets

the stage for the introduction for a

recommendation agent.

The lesser portion of our sample feels

that they are overloaded with

information when shopping online.

Although the more significant chunk of

the sample feel that they dont, it is

however an easier feat for the consumer

if the information shared on a givenproduct is compiled and presented in an

easier and simpler summarization as

opposed to sifting all the content

available on the internet to make a

shopping decision.

Of the sample surveyed, close to 90% have never come across a Recommendation Agent,

which is cognizant of the fact that it is not a common concept in Pakistan and few have ever

encountered such a facility on the Pakistani e-commerce front. The lack of a recommendation

agent from the Pakistani websites is due to the

lagging behind of our technological development.

Individuals who had come across a

recommendation agent named website with the

option of providing guidance and/or product

summaries on the website of a few European

countries and the West in general.


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Although the market is not aware of the

concept of a Recommendation Agent and

have never come across it, but a significant

portion of the sample surveyed is open to

the idea of taking guidance of an ElectronicAid which shopping online. This shows that

the market is mature for this next step

forward. It is a credit to the development of

E-commerce in the South Asian region that

the consumers are now open to the idea of sharing their likes, dislikes and ideas on the web.

The concept of Recommendation Agents and their utility is further enhanced with the

option to take the guidance on just products attributes or take the consumers preference

and assign weights toeach attribute as

indicated by the

consumer. This will

lead to an in-depth

analysis for the

consumer; the

Recommendation

Agent would list

products in terms ofconsumers preference

and give the consumer

the rationale for such

recommendation.

CROSS TABULATION

Gender * Which factor is most likely to motivate you to shop online?

Count

Which factor is most likely to motivate you to shop online? Total

1 2 3 4 5 6 1

Gender 1 76 41 39 37 37 32 262

2 25 5 13 10 25 10 88

Total 101 46 52 47 62 42 350

Furthermore, from cross tabulation of gender and motivational factors, we find that males

are most motivated to shop online by Convenience and Ease of Payment whereas females

are most motivated by Convenience and Home Delivery. Convenience being a broad factor,we will focus more on Ease of Payment and Home Delivery in our discussion.


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Males are more prone to using the modes of payment online as compared to females,

whereas females are more prone to staying home as is the culture of the subcontinent and

thus would prefer Home Delivery as the most important factor.

Age group * Which factor is most likely to motivate you to shop online?

Count

Which factor is most likely to motivate you to shop online? Total

1 2 3 4 5 6 1

Age

group

183 32 39 39 53 38 284

2 14 14 9 7 7 4 55

3 2 0 2 1 1 0 6

4 2 0 2 0 1 0 5

Total 101 46 52 47 62 42 350

The Cross tabulation for age groups against most motivating factors for shopping online,

show that individuals of ages 20-40 are most motivated by Convenience and Home Delivery.

In comparison fewer individuals picked Availability of Choices and Information as these may

also be available at a physical storefront. Returns and Warranties are chosen the least as the

same is not a common practice in Pakistan or the South Asian region.

CHI SQUARE TEST

Would you like to take guidance from an electronic aid when making online shopping

decisions?

HA0 = Consumers are not open to taking guidance from an electronic aid while Shopping

online

HA1= Consumers are open to taking guidance from an electronic aid while Shopping online

Observed N Expected N Residual

1 211 175.0 36.0

2 139 175.0 -36.0

Total 350

Test Statistics

Would you like to take guidance from an electronic aid when making

online shopping decisions?

Chi-Square(a) 14.811

Df 1

Asymp. Sig. .0001


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Since critical value from the chi-square distribution table for degrees of freedom being 1 and

= 0.01 is 6.635. Since 14.811>6.635 for the test, the decision is to reject the null

hypothesis.

This leads this research to the conclusion that consumers are open to taking guidance from

an electronic aid while shopping online and that the market is mature enough for such a

system to be introduced.

Would you like to take guidance from an electronic aid when making online shopping

decisions?

HB0 = Consumers are not inclined to Recommendation Agents providing advice on weighted

product attributes

HB1 = Consumers are inclined to Recommendation Agents providing advice on weighted

product attributes

Observed N Expected N Residual

1 211 175.0 36.0

2 139 175.0 -36.0

Total 350

Test Statistics

Would you prefer the said electronic aid to give its

analysis/recommendation based onChi-Square(a) 12.446

Df 1

Asymp. Sig. .0001

The critical value from the chi-square distribution table for degrees of freedom being 1 and

= 0.01 is 6.635. Since 12.446>6.635 for the test, the decision is to reject the null

hypothesis.

This is leads this research to the conclusion that consumers are inclined to

recommendation agents which provided guidance based on weighted products attributesbased on the weights assigned to attributes by consumers. The market is

willing to open up to such technological advancements.

The gist of this research paper is the consideration of consumers online

search and purchase behaviour in Pakistan, its maturity and openness to

accepting such technological advances. It is also our finding that if

consumers were to be given the ability to share their likes, dislikes and

general preferences, the concept of recommendation agent would be

welcomed and its utility would be proven beyond all doubt in the Pakistani

Market. Furthermore, the concept of guidance while shopping online based

Conclusion


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on weights assigned to products attributes by consumers would also be received and

accepted by consumers in Pakistan.

There are further avenues for research on Recommendation Agents to which this Research

Paper can prove to be a premise to. The design and launch of a

Recommendation Agent may be taken up for further research and such a

concept could be launched in the Pakistani market based on such research.

The Recommendation Agent can be launched for multiple industries, such as

Furniture, Cars, and Apparel etc.

A short model for a Recommendation could be for the Clothing industry,

whereby a boutique could launch a Recommendation Agent to their

website. If the consumer were to share details of their body structure and

size, the Recommendation Agent could share which clothes out of the products available

would suit the consumer the most, in terms of fitting, fall of the garment, etc.

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2370.2010.00280.x

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3.

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43, No. 3, 2009, ISSN 0022-0078

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Affairs, Vol. 43, No. 3, 2009, ISSN: 0022-0078

6. Tibert Verhagen, Jaap Boter and Thomas Adelaar, (2010), The Effect of Product Type onConsumer Preferences for Website Content Elements: An Empirical Study, Journal ofComputer-Mediated Communication, 16, (2010) 139-170, DOI: 10.1111/j.1083-

6101.2010.01536.x

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FurtherResearch

Prospects

References


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9. Ramkumar Janakiraman and Rakesh Niraj, (2011), The Impact of Geographic Proximity onWhat to Buy, How to Buy and Where to Buy: Evidence from High-Tech Durable Goods

Market, Decision Sciences, Vol. 42, No. 4, November 2011

10.Hung-Jen Su, Lucette B. Comer and Sanghyun Lee, (2008), The Effect of Expertise onConsumers Satisfaction with the Use of Interactive Recommendation Agents, Psychology &

Marketing, Vol. 25(9): 859-880 (September 2008), DOI: 10.1002/mar.20244

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No. 1, pp. 4-21, ISSN 1526-548X

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Appendix A: Survey Questionnaire

Consumers' Online Search and Purchase Behavior and Utility

of Recommendation Agents in PakistanThis is a research being conducted by students of Institute of Business Management (IoBM) for the course of E-Commerce. Kindly fill out the survey below. We are striving to provide genuine and authentic information and resultsthrough our research.* Required

Gender *

Male Female

Age group *

20-30 31-40 41-50 51-60

Do you use the internet ? *

Yes No

What type of a buyer are you ? *

Impulsive Buyer - buying decision without much thought Patient Buyer - buying decision after some comparisons Analytical Buyer - buying decision after thorough research

Have you ever made a purchase online ? *

Yes

No

In your understanding, what are the most important factors that promote online shopping ? *Check more than oneoptions if applicable

Convenience Ease of Payment Availability of Choices Availability of Information Home Delivery Returns and Warranties


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Which factor is most likely to motivate you to shop online ? *

Convenience Ease of Payment Availability of Choices Availability of Information Home Delivery Returns and Warranties

What factor effects your buying decision the most ? *

Variety Price Quality Branding

Do you seek guidance for your shopping decisions ? *

Yes No

When shopping online, do you feel overloaded with Information?

Yes No

Have you ever come across an electronic aid that guides you with respect to your shopping decisions ?If No, pleaseskip the next question

Yes No

If Yes, kindly mention the website/URL

Would you like to take guidance from an electronic aid when making online shopping decisions ?

Yes No

Would you prefer the said electronic aid to give its analysis/recommendation based on

Comparison based only Product's Attribute Comparison based on Weights assigned to attributes of products by yourself

research paper final 1

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