9.3 The Internet Consumer and shopping


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Internet Marketing Intelligence

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Kunnskapskilden –  Internet Marketing Intelligence

Bench on the pier


Internet Marketing Intelligence



Kunnskapskilden – Internet Marketing Intelligence
Internet Situational Analysis of 1to1 Marketing/CRM


Research Project: Internet Situational Analysis of 1to1 Marketing/CRM  from Jan Vig  at Griffith University , Australia  1999/2000



Chapter 1 Introduction/overview

Chapter 2 Search Strategy

Chapter 3 One to One Marketing and its environment

Chapter 4 Environmental Scan

Chapter 5 Market analysis

Chapter 6 Competitors Analyses

Chapter 7 SWOT

Chapter 8 Critical Success factors

Chapter 9 Segmentation, Customer analysis and target markets

Chapter 10 Business Objectives and Strategies

Chapter 11 Marketing Mix tactics and Conclusions



Chapter 9

Segmentation, Customer analysis and target markets



Chapter 9 Segmentation, Customer analysis and target markets

9. 1 Segmentation

9.1.1 Bases for segmenting consumer market

9.1.2 Segmentation Internet users

9.1.3 Bases for segmenting business market

9.1.4 E-Business Market Segmentation

9.2 The Internet Consumer

9.2.1 Shift of power to customer

9.2.2 Main motivations to Surf the Net

9.2.3 Facilitator:

9.2.4 Simplifier:

9.2.5 Accelerator:

9.2.6 It is 5 general categories of adopters of products

9.2.7 Strategies

9.2.8 Demographics-Age

9.2.9 Demographics- Gender

9.2.10 Female Users

9.2.11 Things that attract/repel females

9.2.12 Education attainment

9.3 The Internet Consumer and shopping

9.3.1 Shopping on the Web (Interactive Home Shopping=IHS)

9.3.2 Reasons for using the Web to shop

9.3.3 Placing orders

9.3.4 Dissatisfying experiences with IHS

9.3.5 Perceived risk with IHS

9.3.6 Overcoming perception of risks

9.3.7 Trust in Action

9.3.8 Some supporting facts

9.3.9 Types of goods and decision-making

9.3.10 The IHS difference

9.3.11 Some ways of developing a IHS competitive advantage

9.3.12 24% of retail sales may be consumer direct by 2010

9.3.12 How Do You Fare With Accessory Buyers?

9.4 One to One’s target markets

9.4.1 Target areas

9.4.2 Online targeting




The Internet Consumer and shopping


Research Project: Internet Situational Analysis of 1to1 Marketing/CRM  from Jan Vig  at Griffith University , Australia  1999/2000




http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 5



9.3.1 Shopping on the Web (Interactive Home Shopping=IHS)


  • Of those who shop on the Web, 37.5% spend US$500 or more
  • 70% browse without intention to buy at least several times a month or more (product information seeking)
  • 60% search at least several times each month with an intention to purchase
  • 50% purchase at least once a month on the Web
  • Almost 70% of online shoppers actually communicate with vendors about products
  • 86% spend less than 20 minutes to search for a product
  • 75% give up within 30 minutes of searching
  • Type of information e-shoppers look for:
  • Detailed information on product 92%
  • Price comparison 80.3%
  • Availability of product 76.8%
  • Store location 26.8%



9.3.2 Reasons for using the Web to shop

  • Convenience 82%
  • Save time 74%
  • Information availability from vendors 73%
  • No pressure 62.7%



9.3.3 Placing orders

  • Only 8% of e-shoppers make purchases on the Web all the time
  • Outside of the USA, over 20% of shoppers do not make purchases over the Net.
  • 95% of Web users make at least 1 purchase decision based on information gathered on the Web
  • Close to 90% of e-shoppers have visited Web site of store they frequent in person



9.3.4 Dissatisfying experiences with IHS

  • Could not find what they were looking for 67%
  • Disorganised site 59%
  • Slow downloading 56%
  • Poor page design 37.9%



9.3.5 Perceived risk with IHS

  • Time risk -waste time searching for product
  • Vendor risk-site may be a scam; real world-physical settings may be reassuring
  • Security risk- mostly concerning credit card numbers
  • Brand risk- brand they are buying has problems
  • Privacy risk-concern of abuse of personal information



9.3.6 Overcoming perception of risks

  • Need 3 kinds of trust:
  • Trust in mechanics of selling process-consumers must know or be directed to make transactions properly
  • Trust the integrity and fairness of specific vendor
  • Trust in firm’s ability to deliver promise



9.3.7 Trust in Action

  • Guarantees and testimonials
  • http://www.amazon.com -credit card guarantee
  • Word of mouse- helps promote trust
  • Branding: Amazon.com
  • Endorsement by third parties: travelbids
  • com- certificate proving non-abuse of information customer provides 1:1 marketing



9.3.8 Some supporting facts

Important features quoted by e-shoppers about vendors when shopping:

  • Quality information -78.4%
  • Easy ordering-76.6% (trust in mechanics)
  • Reliability -74.3% (trust in promise and integrity)
  • Security– 73.2% (trust in mechanics and integrity)
  • Variety– 73.0%



9.3.9 Types of goods and decision-making

  • Convenience/commodity goods- purchase where available, low brand loyalty
  • Price is key factor
  • Specialty goods- strong brand preferences (art supplies, mountain bikes)
  • Price will be compared, but service and convenience also important
  • Shopping goods (stereo equipment)-extensive learning undertaken
  • Web site which provides best info has competitive advantage
  • Search characteristics are the characteristics that are evaluated during search on Internet
  • Experience characteristics- after purchase- reassurance may help
  • Credence characteristics- a more elaborate explanation of such characteristics on Web site and on follow-ups may help




9.3.10 The IHS difference

  • Expanded universe of offerings
  • Efficient means of screening and comparing offers
  • Unimpeded search across stores and brands
  • Memory for past selections




9.3.11 Some ways of developing a IHS competitive advantage

  • Efficient distribution system
  • Assortment of complementary merchandise (or be a Web guide for complementary merchandise)
  • Collection and utilisation of customer information (1:1 marketing)
  • Presentation of information as requested-customer service (esp. with tech products needing lots of information)
  • Unique merchandise



9.3.12  24% of retail sales may be consumer direct by 2010

http://www.1to1.com/articles/i1070199/index.html?VT=gJi_mUea3C0ijIi_aQ2DibtUcidqcuKD7B_jlJC13T#a1 Martha Rogers, Ph.D. 10July 1, 1999


As much as 24 percent of retail sales may be direct to consumers by the end of the next decade, according to a study conducted by Peppers and Rogers Group and California-based Institute for the Future.


By 2010, the number of households heavily using e-commerce and grocery-delivery services is expected to rise from 6 million today to 29 million, accounting for a minimum of almost 10 percent of all retail sales, with the potential to reach 24 percent, the report states. The study also found that by 2010, total Consumer Direct (CD) revenue for both products and services will account for between $438 billion and $1.1 trillion, compared to $190 billion for 1998.



The Consumer Direct study found an arena poised for explosive growth. The CD channel is transforming the relationship between businesses and consumers. Most U.S. consumers, about 75 percent, have used at least one direct-to-consumer channel to order products and services remotely for direct delivery to the home. While most use the mail or telephone on occasion to respond to mail and magazine ads or catalogs, more consumers over the next decade will begin using the Web to shop.


Here are some brief excerpts from the findings:

Significantly fewer households, from 67 percent today to 50 percent in 2010, will use mail and catalogs, while households using the new channels will at least triple, from 11 percent today to 33 percent in 2010.

CD shoppers are better educated and have higher average incomes than who don’t shop direct.

To reach these different and valuable customer groups the most profitably, businesses will become 1to1 enterprises, developing systems to capture what they learn about a single shopper across all delivery channels.  In the future, an online provider will deliver a wide range of products and services, blurring traditional distinctions between existing channels and driving companies to create alliances with new partners.

By 2010, look for more integration across direct-to-consumer channels, as well as between CD and brick-and-mortar stores, throughout the purchasing process. Successful companies will leverage synergies across channels in their marketing, sales, distribution and customer service – indeed, at every point of contact with the customer. The most successful companies will be those that og a step beyond, using the interactivity CD offers to cultivate Learning Relationships with their best customers so they can better meet, and even exceed, individual customer needs.

If you’re interested in learning more about the Consumer Direct studies, take a look at our findings about Shopping Behavior in the Age of Interactivity.





9.3.12 How Do You Fare With Accessory Buyers?



A study on accessory buyers (features & options) shows how they are distinctly different from technology buyers as a whole.


Online Buying: Where are People Spending Their Dollars?


While much recent press has covered the growth in ecommerce, less has focused on the difference between the amounts people are willing to spend online v. offline. Some categories would seem to be «naturals» for ecommerce, such as computer hardware and software, while others, such as automobiles might be more of a stretch.

From IntelliQuest’s World Wide Internet Tracking Study (WWITS), we know that there are only four categories of products and services which have a penetration of 10% or greater among today’s wired Americans. However, there are a multitude of other products and services which are poised for growth

To better understand future purchasing patterns, IntelliQuest’s Ebranding study asked respondents about their spending patterns both on and off the Internet. Respondents who purchased various categories of products and services for personal use were asked to provide us with the dollar amounts spent online and offline in the past three months as well as their projected spending for the next three months.

Analysis of this data reveals that travel is the category to watch. While only 8% of online buyers in the WWITS study indicated they purchased travel over the Internet, the Ebranding study clearly marked travel as one of the big ticket and large growth categories. Not only was this the only category where respondents spent more online than offline, travel also had the largest planned increase in online expenditures

And what about those categories that were «naturals» – software and computer hardware? They are naturals in the sense that they were the second and fourth most frequent online purchases. However, within these categories, many people still prefer to make a large proportion of their purchases offline. For example, offline software expenditures within the past three months were approximately three times that of online software purchases. While the difference was not so dramatic in the computer hardware category, it is clear that respondents still made a large proportion of their purchases offline.

As for respondents’ computer-related purchases planned for the next three months, people planned to maintain their 3 to 1 offline vs. online ratio for the purchase of software. On the hardware side, respondents dramatically decreased their planned spending, no doubt because many home consumers just purchased new systems during the holiday PC-buying season.


Purchasers of low involvement items such as books and music tended to spend fairly equivalent amounts online and offline and indicated that they planned to maintain their spending levels in the future.



The success of the online travel merchants may lie in the fact that the process is essentially no different than that performed offline. Flight schedules are booked, credit card numbers are taken, and confirmations are provided to customers. By contrast, many people want to try out their new home computer prior to making such a large purchase, and when they’ve reached a decision, they want to take their new PC home that night, not wait several days before they can install it. At the other end of the price continuum are books and music. Since these items are generally inexpensive, they are low-risk to order over the Internet. These categories also allow for pre-ordering of long-awaited future bestsellers and the latest cd from favorite bands.


While ecommerce will by no means be limited to books, music and travel, this data offers important lessons for Internet marketers:


There are important Internet marketing distinctions between high-dollar items and low-dollar items. Sales in these categories will be driven by different purchase and brand dynamics.


For high-dollar items, the trust and loyalty associated with well-know brands will matter more. For example, Microsoft has been more successful selling high-priced items like airline tickets than relatively unknown e-commerce brands. This Internet/branding equation may also offer an opening for well-known brands to leverage their brand identity into new product markets.  For low-dollar items, new Internet-only brands may stand a stronger chance of succeeding than in the higher dollar product categories. While Amazon.com and CDnow are developing into strong brands, they did not start out that way. People appear willing to buy low-dollar items such as books, posters, and even groceries from web sites that are not associated with strong brand names.

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