Consumer purchasing on the Internet:: Processes and prospects

European Management Journal Vol. 16, No. 5, pp. 600–610, 1998 1998 Published by Elsevier Science Ltd. All rights reservedPergamon

Printed in Great Britain0263-2373/98 $19.00 + 0.00PII: S0263-2373(98)00036-X

EXECUTIVE BRIEFING

Consumer Purchasing onthe Internet:Processes and ProspectsPATRICK BUTLER, Trinity College, DublinJOE PEPPARD, Cranfield School of Management, UK

Much of the business transacted over the Internettoday is in the business-to-business sphere. Outsideof specialised niche areas like information tech-nology and other information-based products, busi-ness-to-consumers commerce is relatively undevel-oped. One principle that holds true in themarketspace is that before cybermarketers can effec-tively respond to consumer demand, they mustunderstand consumer behaviour. Internet mar-keters should revisit traditional models of con-sumer behaviour, examine their underlyingassumptions, and explore their validity in the newInternet context. A standard model of the consumerbuying behaviour processes is applied to purchas-ing situations on the Internet, with a view to com-paring traditional marketplace transactions with theemerging virtual marketspace. Understanding con-sumer behaviour in Internet purchasing remainsthe marketing management imperative. 1998 Pub-lished by Elsevier Science Ltd. All rights reserved

The growth of interest in the Internet as a shoppingand purchasing medium is fascinating for prac-titioners and observers alike. In stimulating a techno-economic paradigm shift, the Internet is causing a re-evaluation of traditional assumptions underlying theconduct of business. Despite the hype of onlineretailers, website developers and many observershowever, there have been serious casualties in thefield in the early battles to win ground in this newcolonisation. The early fallout of IBM’s sponsoredweb shopping malls, for example, is due in part tounrealistic expectations of the demand potential inthe field, technology problems, and rather naı̈veunderstandings of the true nature of competition inthe new world. Yet despite these initial tribulations,the Internet and World Wide Web (WWW) do openup a vast arena providing both opportunities andchallenges.

Much of the growth in revenue from business trans-actions over the Internet has been fuelled by busi-ness-to-business exchanges. The result is that thereis a considerable and growing body of knowledge,experience and expertise in the field of business-to-business electronic commerce. Yet with the exceptionof software, books, some travel services and a fewother niche areas, that same depth of understandinghas not been achieved in the individual consumerfield. To exploit this new medium requires not justan understanding of consumer behaviour and theconsumer decision making process, but of how newtechnologies challenge the traditional assumptionswhich underpin conventional theories and models.

Critical to understanding consumer behaviour incyberspace, as in the physical world, is to understandhow the individual consumer makes purchase choicedecisions. That is, if cybermarketers know how thepurchase decision is made, and identify the stages inthe purchase decision, then they can analytically fol-low through in developing marketing strategies. Theprimary purpose of this paper is to outline the tra-ditional consumer buying decision process and com-pare it with Internet buying behaviour.

Some of the important issues in the information econ-omy are first noted, focusing particularly on theimplications for marketing. In order to set reasonableparameters to the paper, a classic typology of con-sumer purchasing situations is presented. Internetpurchasing in terms of this model is then assessed,and the critical issues are identified. Finally, the mar-keting tasks and strategic directions at each stage ofthe buying decision process are outlined.

CONSUMER PURCHASING ON THE INTERNET: PROCESSES AND PROSPECTS

The Information Economy

The emergence of the information economy has beenpredicted for generations. While descriptions of thisnew era vary from the speculative, as captured inpopular cyber-novels (Gibson, 1984), to the more pol-emic (Negroponte, 1995), what is common is that thisemerging era will have fundamental impacts on allaspects of social, economic, business and political life.Already the very nature of business itself has beenaffected. Indeed, the US federal government recog-nises the dynamic by now collecting economic datausing a revised classification system which explicitlycaptures ‘information’ jobs.

This new era is being brought about by a number ofdevelopments, including (i) rapid technological con-vergence, (ii) greater connectivity, (iii) enhancedinteractive capacity, and (iv) increased organisationalco-ordination capability/options (Butler et al., 1997;Malone et al., 1987; Yoffie, 1996). And it is perhaps theInternet which is making the information economyvisible for the ordinary consumer.

The convergence of digital technologies is blurringthe traditional distinction between entire industries.Distinct sectors are seen to fuse in a digital environ-ment. Who, for example, can be sure where the com-puter industry ends and the telecommunicationsindustry begins? Disaggregation of existing valuechains and the formulation of new information-basedvirtual enterprises make for particular challenges inindustry analysis. Such technological convergence isleading to the growth of new products and serviceswith overlapping functionality. While offering moresolutions to consumer’s problems, they also confuseconsumers.

Connectivity refers to the ability of consumers toaccess and participate in Internet communications.One of the consistent lessons of technological inno-vation is that the agreement of standards stimulatesboth uptake of new technologies and investment. Theclassic example is the technically superior but pro-prietary Apple Macintosh computer losing out to theopen architecture of the IBM compatible machines.More recently, the exponential growth in mobilephones is largely due to the GSM standard. A similaropenness now pervades today’s network techno-logies making it easier to connect to global networks.Marketers in the new domain must follow closely thebattles for standards — the final choice at the con-sumer level may be constrained at first by the adop-tion of a single standard, but widespread uptake willenable economies of scale and consequent advan-tages.

Unlike older technologies, new information techno-logies provide for true interactivity between buyerand sellers. This interactive element is of crucialimportance, since much of business activity consists

of interactions (human and technical communication,data gathering, collaborative problem solving,negotiation). Indeed, a recent McKinsey report sug-gests that 51 per cent of US, and 46 per cent of Ger-man, labour costs are accounted for by interactiveevents (Butler et al., 1997). Technology increases ourcapacity to interact and serves to decrease theamount of time spent on such activities, a time whichnot only incurs cost but may add little value.

For organisations, new technologies have alsoincreased the range of options available in relation toco-ordination, permitting new configurations of bothintra- and inter-organisational activities. The verti-cally integrated firm, with the traditional advantagesof co-ordination and control, is giving way to newstructures. For instance, where a massive physicalasset base of buildings, equipment and transpor-tation might have been advantageous, it may nowonly restrain the flexibility of the organisation as itdecouples the potentially valuable elements of itsvalue chain. The virtual organisation, a grouping ofdistinct entities that each contributes unique com-petencies to a specific business project and eventuallydisbands on completion, is common in some indus-tries. For example, Italian motorbike marque Aprile isnot made by one company or one leader company,but represents the joint efforts of many companies,each bringing their particular strengths to bear.

Competing in the Information Economy

Competing on the Internet is different from compet-ing in the traditional industrial world. Competitionno longer takes place in the physical marketplace butin the marketspace (Rayport and Sviokla, 1994). Thiscomputer-mediated environment has profoundimplications for how business is transacted betweenbuyer and seller. The content of the transaction is dif-ferent in that it is based on information about theproduct or services rather than on its physicalappearance or attributes. The context of the trans-action is different; instead of taking place in a physi-cal world, it occurs in a computer-mediated environ-ment with the buyer conducting the transaction froma computer screen. Consequently, to be a player inmany industries does not require a physical infra-structure like buildings and machinery; a computerand communications platform is sufficient.

Internet Dynamics

For the marketer, the Internet poses many challenges.In particular, the virtual medium provided by newtechnologies challenges not only traditional theoriesof marketing but the very practice of marketing itself.A number of significant shifts can be discerned in thedevelopment of such business.


From Broadcast to NarrowcastTechnology renders obsolete the traditional one-to-many model of mass marketing communication.One-to-one communication between seller and buyeris now easily achieved (Hoffman and Novak, 1996).Communications can also be geared to take accountof such individual factors as demographic profile,lifestyle interests, shopping behaviour, purchasinghistory and so on. Mass customisation becomes poss-ible with both products and communications beingcustomised to individuals. For example, Crayon.comenables individuals to create their own newspapersfrom many international sources based on their indi-vidual preferences. In constructing this customisednewspaper, the consumer might choose to have hisworld news from The Los Angeles Times, local newsfrom The Irish Times, sport from Le Monde and culturefrom Die Welt.

From Passive Surfer to Interactive BuyerToday’s consumer is an increasingly proactive con-sumer. He or she is less likely to be a passiveabsorber of the marketer’s message, and more likelyto have been directly involved in its development.Communications between the parties may haveenabled the potential buyer to specify their interestsand request the seller to keep them informed ofupdates, upgrades or just relevant news. ‘Push’ tech-nologies encourage the consumer to outline either thegeneral or specific nature of their interests, and inviteall comers to supply the information and offer thedeal.

From Limited Physical Space to Unlimited VirtualSpaceIn this new world, presence is not achieved by pur-chasing limited physical space as with newspapers,magazines or billboards. Space is unlimited to theextent that it can be easily increased, although thereare limitations as to what one can place on a singleweb page. Perhaps the unique characteristic of busi-ness on the Internet is its unconstrained physicalspace. Organisations and people are no longer con-fined by physical infrastructure like plant and officebuildings. Newspapers, for example, are no longerbound by traditional publishing economies of scale.

From Advertisement to Electronic Trade ShowThe traditional newspaper advertisement or bro-chure setting out the sellers’ wares has both scopeand scale limitations. The technology now exists totransform such a medium into an electronic tradeshow. When speed is an important criterion for suc-cess, the challenge is to convert quickly visitors intoleads and then into customers.

Internet as Media

The medium of the Internet, therefore, not only pro-vides information albeit of a richer nature than in themarketplace, but is also a mechanism for communi-

cation, an environment for conducting the trans-action, and possibly a channel for actually deliveringthe product or service to the consumer (Angehrn,1997).

As a medium for information distribution and dis-semination, the Internet accesses a global audience.Unlike traditional communications media, the use ofvoice, video, text and images provide a richer pictureof the company’s wares. Information can be tailoredto the requirements of the consumer either by elicit-ing information from them or through the use oftracking technologies.

As a medium for communicating with customers orpotential customers, the interactive nature of theInternet allows the marketer to establish an activedialogue with consumers. By using e-mail, onlineforums or a more advanced interaction space, infor-mation and opinions can be exchanged in a two-way process.

As a medium for conducting transactions, orders,invoices and other business documents can be sentelectronically. Payment can also be made elec-tronically using a credit card, although in the futurethe ‘electronic purse’ may enable ‘micro’ paymentsto be made.

As a distribution medium, the Internet enables cer-tain products and services to be easily delivered toconsumers without geographical limitations. Obvi-ous examples include software, music and other digi-tal-based products. Less obvious ones include con-sulting services such as Ernst & Young’s onlineconsulting site. It may also be possible to increase thevalue of a core physical product through capitalisingon information. This is what Federal Express haveachieved by permitting customers to enquire into thestatus of their package shipments using the WWW.

Understanding Consumer Behaviour

Despite such fundamental change in the structureand process of buying and selling, one principlewhich holds true in the marketspace is that before mar-keters can effectively respond to consumer demand,they must first understand the consumer. There aregeneral models of buying behaviour that enable anunderstanding of the process which consumers fol-low in making a purchasing decision. These modelsprovide explanatory and predictive ability which, areof critical importance to marketers.

The changing market environment is highly complex,and can be subjected to analysis from many perspec-tives. At the broadest level, the new economics ofinformation addresses the uncoupling of informationfrom the physical value chain and the effects onindustry structures and processes (Evans and Wurs-


ter, 1997; Rayport and Sviokla, 1995). At the inter-mediate level of trading, the primary concern is inter-activity (Butler et al., 1997). At the level of theindividual consumer, however, the new concerns arethe process by which consumers make decisions inthe new environment (Peterson et al., 1997). It is cer-tainly the case that new models of web-based pur-chasing behaviour will only be developed and fin-essed through ongoing research and application.Generic models suffer the natural weakness of beingtoo general to guide marketing activity, whereasmodels of specific situations are often not generalis-able. Nonetheless, the purpose here is to set out thebasic elements of the purchasing situation and tocompare the traditional with the new.

Purchasing Categories

The classic typology of purchasing categories is setout in Figure 1. This schema portrays a continuumextending from routine problem-solving behaviourthrough limited problem solving to extensive prob-lem solving. Any buying situation will be placedalong the continuum according to the degree ofactive reasoning required for a particular purchas-ing decision.

Routine problem-solving behaviour, typified by thepurchase of a newspaper or chocolate bar, is a simpleand straightforward task for the individual. The con-sumer is comfortable and experienced in the process,and it is perhaps something that the consumer doeson a daily basis. There is no great sense of personalinvolvement in the purchase — the individual willhardly be judged on the purchase, the price is low,and the risks associated with getting the wrong pro-duct are negligible. At the other extreme, however,typified by the purchase of hi-fi equipment, a car oran apartment, is the extensive problem-solving situ-ation. Here, there is a great sense of personal involve-ment in the decision, the purchase is infrequent andso the consumer does not have any or much experi-ence in the process, and the perceived risks are high.Between the two extremes is the limited problem-

Figure 1 Consumer Purchasing and Characteristics of the Purchasing Decision

solving situation. When involvement is relativelylow, when the alternatives are not perceived to bewidely differentiated, and when the time frame isrelatively short, then this situation prevails.

For the purpose of comparing the issues in thedecision process between an individual shopping inthe physical world and on the Internet, we will exam-ine the extensive problem-solving (EPS) situation inthe first instance. This is appropriate early in the lifeof consumer-level electronic commerce, given thelack of experience of potential customers, the per-ceived risks in payment security, and the time takento learn and become familiar with the purchase rou-tines on the Web. With experience, however, manysuch purchases will be more realistically categorisedas limited problem solving (LPS).

The Consumer Decision Process

The modelling of consumer decision making enablesmanagers to explain and predict consumer behav-iour, and thereby provides a basis for marketingdecisions. The traditional framework for analysts ofthe LPS and EPS buyer decision processes is a linearstages model of five key steps, as outlined in Figure2. Of course, iteration exists between the stages.Indeed, given the speed at which information is nowupdated, it could be argued that the loops backwardin the model are increasingly important (Zellwegger,1997). Nonetheless, the general thrust is forwardthrough the stages. The consumer progresses firstlyfrom a state of felt deprivation (Problem Recognition)to the Search for Information on possible solutions. Theinformation gathered, be it from internal sources (e.g.memory) or external sources (e.g. discussions, bro-chures, sales promotions) provides the basis for thenext stage — the Evaluation of Alternatives. This stagerequires the development and comparison of pur-chasing evaluation criteria.

The Choice/Purchase stage concerns the action oractivity of the purchase, and includes such issues asthe place and means of purchase as well as the actual


Figure 2 Consumer Behaviour and the Purchasing Decision

Figure 3 Consumer Marketing Issues in the Marketplace and the Marketspace

decision to buy. Finally, Post-Purchase Behaviour, asan explicit stage in the process, is critical in the mar-keting perspective. The degree of satisfaction/dissatisfaction with the product/service is a majorconcern of marketers, and provides information forfuture products and services. This framework is use-ful in enabling the complexities of the externalenvironment and internal information processing tobe captured. Each of these stages is now examinedin turn and compared in the context of the marketplaceand the marketspace. Figure 3 provides an overview.

Problem Recognition

The first stage of the consumer decision process trig-gers all subsequent activity. The consumer is com-pelled to fill the gap between the actual state(deprivation) and the desired state (fulfilment) whenhis or her threshold of problem awareness is reached.Problem recognition may be triggered by a numberof external or internal factors. For example, anincrease in a person’s financial situation can triggera consumption decision; running out of stock results


in a depletion that requires restocking; marketingstimuli, such as a new product announcement orsales promotion campaign, may lead the individualto perceive a particular want for the product.

Consider the external marketing stimuli: In tra-ditional markets, conventional marketing communi-cations stimulate demand via conventional media,e.g. an advertisement on television. On the Internet,however, the medium is new, and so new kinds ofcommunications are required. Traditional mass mar-keting approaches such as advertising reflect the onemass marketer communicating a common message tomany consumers. Of course, much of the audiencewill not be interested, and there is considerable wast-age. But new information technologies fundamen-tally change that. Computer-mediated environmentsenable identification of individual consumer needsand wants, and the subsequent design and deliveryof individual, customised communications to the oneindividual by many suppliers. This, then, supersedesthe traditional ‘one-to-many’ practice.

In terms of consumer problem recognition, the Inter-net marketer can capture the consumer at this earlystage in the process. That is, the marketer, by virtueof powerful databases of consumer information, is ina better position to know and anticipate the con-sumer’s needs and wants. Furthermore, the problemthresholds that will trigger action may also beknown. Indeed, the marketer may be in a position tomanage the consumer’s purchasing function in a waythat has only been known in business-to-businessmarkets heretofore. For instance, the benefits of EDIemphasise the effectiveness of automatic re-orderprompts at specific stocks levels, product and serviceupdates, and automatic upgrades for valued cus-tomers. These all make the decision less complex forthe buyer, and more manageable and effective. Suchrelationships are now increasingly possible at theconsumer level.

Direct marketing activity in recent years has beenbased on this kind of relationship potential. But theleap forward of the Internet will be largely empow-ered by tracking technologies. A ‘cookie’ trackingdevice will enable ‘click stream’ analysis of individ-uals, such that their browsing activities, interests andpurchase behaviour may be exactly known to themarketer. Then, by solicitous communications, theconsumer may be contacted on the basis of his or herspecific needs and wants as determined by behaviourpattern analysis. The relationship developmentadvantages accruing to the pioneers of such analyti-cal and communication technologies are enormous.The problem recognition stage in the purchasedecision process remains essentially the same, but thepotential for marketer – consumer relationships isenhanced.

The primary strategy issues for marketers at thisstage in the process are the development of com-

munications technologies that will enable the degreeof customer relationships wherein the consumer’sproblem recognition will be anticipated, or even trig-gered, by the seller.

Information Search

Whereas the problem recognition stage motivates theconsumer to act, the information search stage is whenthe consumer takes action to gain knowledge. Thesourcing of information is at the heart of this stagein the consumer buying decision process. Essentially,the consumer seeks information for decision making,and the marketer must provide the necessary infor-mation.

The management of information is the primary roleof the agent or broker in the marketplace. This is theeffective function of travel agents, for instance. But,in the marketspace, when an airline sets up its ownwebsite with interactive flight information and book-ing facilities, for example, then the traditional inter-mediary is bypassed in a classic case of dis-interme-diation. So, the information can be sought andaccessed directly by consumers because of infor-mation technology developments. Critically, theinformation provider or broker can no longer survivein a passive role.

The emphasis has moved from a total reliance onattracting visitors to the seller. The emergence of newpush technologies means that communications cannow be sent routinely to targeted recipients who areknown to be interested parties by virtue of their earl-ier visits to the website, their queries and their gen-eral Internet browsing and ‘shopping behaviour’.That is, the information search stage in the frame-work is anticipated with greater clarity and focus; theability of the information provider to proactivelylocate the interested searcher and provide the desiredinformation is now hugely enhanced. Consumersmay register for continual information updates androutinised offer information at no charge. Infor-mation is virtually free, and the costs of accessinginformation are negligible. Given the free flow of pro-duct information in the marketspace and the potentialfor overload, the marketer with the best-designedinformation package will generate the competitiveadvantage.

Webcasting is a way of pushing information outacross the Net rather then waiting for consumers tofind it. PointCast is one such Internet service whichliterally broadcasts news, sport, weather reports,stock prices and other information directly to a PCin a personalised, easy-to-digest newscast. There isnow no need for broad-based surfing: the infor-mation finds the subscribers once they have specifiedthe information they want to receive. In what is theequivalent of the screen saver, PointCast converts the


idle computer screen into an eye catching TV-likenewscast when the computer is not being used.

As individuals come to utilise the Internet for con-sumer purchases, a situation of perfect informationis almost attainable. However, it must be noted thatconsumers’ sense of uncertainty can actually increaseas they gain more information. Information ‘over-load’ occurs when we learn more about the alterna-tives available to us, and the search becomes ‘psycho-logically costly’ (Wilkie, 1994). When humans cannotplot or track the totality of information, they deliber-ately simplify their problem — they develop heuris-tics that must be recognised by marketers. Chiefamong these, for the marketer, is brand loyalty andall that goes with the development of a brand —identity, reliability, trust.

For the marketer, the strategy issues related to thisstage of the process revolve around attracting infor-mation-seeking consumers and providing the infor-mation they require. In the marketspace, this demandsa good net presence at the very least. In traditionalmarkets, the intermediary function is largely basedon information provision and exchange. As com-munications technologies change and as channel dis-intermediation and re-intermediation become morecommon, matching information content with the con-sumer’s requirement, while continuing to be funda-mental to success, will require new approaches toinformation provision and exchange.

Evaluation of Alternatives

The third stage of the consumer buying decision pro-cess involves the analysis and evaluation of alterna-tive solutions. So, the consumer has sought andfound the relevant information, and must now use itto make the purchase decision. Traditional sourcesof information for the evaluative stage include pastexperience, marketing-sponsored communications,consumer groups and research institutions, andword-of-mouth. In Internet markets, however, infor-mation technologies allow for more, and moredefined, evaluative criteria to be used. In this regard,when consumers experience information overload inthe evaluation process, or when the ‘psychologicalprice’ of evaluation becomes too high, the advantagemay be to the ‘safe’ branded or established competi-tor.

The counterpoint to this, however, lies in the com-parative possibilities of newly developing intelligentshopping agents. CompareNet, for instance, has aprogramme that for a wide range of goods and ser-vices will search the Web for the product the con-sumer specifies. Then, it will help the consumer tochoose and arrange the relevant criteria for the evalu-ation of that product. Finally, it will instantly pro-duce tabulated data that allow the buyer to comparethe options. The service provides simple definitions

of these criteria and indicates why they are importantin the purchasing decision. This educational role isalso enhanced with buying tips to empower thebuyer.

While this would appear to be a very democraticmodel, already several web sellers are blocking suchshopping agents from their sites, notably in the musicCD field. Despite this setback, however, we canexpect this service for almost any purchase imagin-able in the near future. Of course, it is clear that thecompetitor without an Internet presence cannot evenget to the point of being considered.

It would be naive to think that the Internet providesonly a simple visual evaluation. Imminent develop-ments will enable highly sensory interactivity.Already, three-dimensional representations can‘walk’ a consumer through a new apartment, cloth-ing can be ‘tried on and modelled’, and technologiessuch as WAV and Real Audio transmit selections ofmusic for the potential purchaser. Virtual reality testdrive simulations are developing rapidly, and soonAldous Huxley’s ‘feelies’ may not be the absurd scen-ario that was once sneered at.

In this arena of powerful information forces weshould not be dismissive of simpler approaches toevaluating alternative solutions to problems. In thesame way that word-of-mouth communication andthe reference of family and friends is a central influ-ence at this stage of the decision process in the tra-ditional marketplace, new kinds of reference groupsare central in the marketspace. In effect, a discussiongroup of interested parties in any field serves thisrole in the new environment. The virtual communitycan have all the power of the traditional referencegroups but with even greater quality and quantity ofevaluative information available to it and the meansto share that information (Hagel and Armstrong,1997). The notion of community can convey enor-mous credibility on the information source. Ideas andproposals are vetted by and with trusted colleaguesin the community. The best-known online communi-ties include Agriculture Online, Garden Escape andMums Online.

In the entertainment field, for instance, Firefly.comhas proven to be an exciting and successful sourcefor information searchers. It is, by nature and design,a body of like-minded individuals whose patterns ofentertainment consumption are similar and whoshare freely their knowledge of, and views on, a widevariety of goods and services. Even simpler versionsof virtual communities are typified by Amazon.com’s(the World’s Biggest Bookstore and the Internet’slargest online bookseller) open book reviews, wher-eby a potential buyer can read book reviews by otherwebsite visitors.

For the marketing strategist, the first issue for alter-native evaluation is to understand the criteria


employed by the consumer to evaluate the product,the preferences of the consumer, and the positions ofcompetitors on these criteria. This is underlinedwhen the comparative-type search engines describedincrease in popularity. Corporate identity and brand-ing strategies are also relevant here, and the Internetwill provide opportunities for exciting new brands.

Purchase Decision

The purchase stage of the process involves decisionson where and how to buy. A core question concernswhy people go shopping. Consumers do not shoponly to buy. Personal shopping motives includediversion from daily routines, self gratification, learn-ing about new trends and physical activity. Amongthe social motives are communicating with otherswith similar interests, peer group attraction and thepleasure involved in bargaining and haggling. So, theinvestigation of these kinds of motives betweenphysical shopping and Internet shopping alsorequires comparison.

Where to buy is a decision regarding the choice ofseller. Competition on the Web is driven by sellersattempting to build more exciting and interestingsites than their competitors, attracting the right cus-tomers to those sites, and providing superior shop-ping experiences to induce purchase. How to buyconcerns the nature of the transaction and contract.Many of the products and services currently avail-able to individual consumers on the Internet are digi-tal e.g. software and upgrades, or easily physicallytransported e.g. music CDs and books. The futurebroadening of the base will require particular analy-sis of physical delivery issues. For example, Pea-pod.com takes and delivers grocery orders in variousregions of the USA via alliances with grocery chains.The actual delivery routines for such a service areprobably more complex than the ordering, packingand payment routines. Whereas the order can be metwithin the one organisation and under one roof, thelogistics of physical delivery of relatively bulky butrelatively low-value grocery orders is an entirely dif-ferent proposition.

New shopping and purchase activity on the Internetis giving rise to new alliances between Internet sellersand distribution organisations. This may be inter-preted as a boon to traditional distributors. Considerthe case of courier and delivery firms: whereas thelikes of United Parcel Service and Federal Expressuntil very recently would have been highly depend-ant on the delivery of document parcels, fax and e-mail now enable direct transmission between the par-ties without any need for an intermediary. Such dis-tribution organisations need to find new markets andopportunities. With the rise of Internet shopping, weare likely to see a shift away from physical retailingas we know it, and a corresponding shift to homedeliveries of a wide range of goods. This, then, would

appear to be an opportunity for the worried couriersand distributors. As an example, another US Internetgrocer — NetGrocer.com — had an offer wherebyFedEx would deliver their customers’ grocery parcelsworth more than $75 for no charge at all.

Internet marketers must make the shopping experi-ence easy and enjoyable for their customers. Ease ofordering, payment and delivery are critical in thispurchase stage. Straightforward routines with mini-mum complexity and maximum compatibility withmarketplace patterns of behaviour will aid in the dif-fusion of Internet purchasing at the consumer level.Clear explanations of how to order, how to pay, whatto expect on delivery — all enhanced by innovativetext and graphical features — are the key. For mostInternet shopping sites at present, the customerplaces his or her chosen goods in a virtual ‘shoppingcart’. Indeed, the virtual cart is accompanied by a listof contents on the screen, and often with a cumulat-ive running total of the value of the goods. It is thenpossible to make a final decision on which items toretain and which to discard just before arriving at thevirtual checkout. Objectively, this is a more customer-friendly scenario than the ‘real world’!

The question of security concerns all inexperiencedInternet shoppers. Considerable progress has beenmade in encryption, to the point where many sellerswill even guarantee to make good fraudulent lossesarising from Internet transactions. The Secure Elec-tronic Transaction (SET) protocol is set to populariseonline credit card purchases. This protocol is essen-tially a set of written standards that describe how cre-dit card associations, banks, merchants and con-sumers should implement credit card transactionsacross the Web. SET will eventually require onlinecredit card users to possess a new form of identifi-cation called a ‘digital certificate,’ an electronic ident-ity vouched for by a trusted third party such as abank. At present, many Internet sellers take creditcard details only at the initial registration, and dedi-cated customer identification passwords negate theneed for further communication of confidential infor-mation.

In terms of the marketing implications of consumerbehaviour at the choice/purchase stage of thedecision framework, ordering, payment and deliveryare the key strategic issues. Marketers must make thebuyer feel comfortable with the decisions on whereto buy and how to buy. Clarity in understanding,compatibility with behaviour patterns, and a sense ofsecurity must be managed to this end.

Post Purchase Behaviour

The final stage in the framework is post-purchasebehaviour. It is explicitly included as a component ofthe model, rather than as something that is outsidethe process, because of its contribution to under-


standing the totality of consumer behaviour. Giventhe emphasis in marketing on the development ofongoing relationships with customers, the actual saleshould be perceived as a starting point rather thanan end. So, how the customer takes delivery of theproduct, how the product is used, the degree of satis-faction, quality of the service dimensions, customercomplaints and suggestions are all critical to under-standing consumer behaviour. This, of course,applies both in the marketplace and in the marketspace.

One important difference between relationshipdevelopment in the two types of market is that whiletraditional relations can emphasise ‘high touch’, vir-tual markets can emphasise ‘high-tech’. The formerrelies more on human interaction and personal inter-est for the development and maintenance of goodcustomer relations between buyer and seller. The lat-ter is more reliant on the power of information andcommunications technologies to anticipate andsatisfy customers’ needs, and thereby to forge andcontinue business relationships. So, for example, atailor making bespoke suits of clothing develops life-long personal relationships with his clientele. TheLevi Strauss clothing company employs technologyto customise a simple pair of denim jeans through ITconnections between the boutique and the factory. Ofcourse, each is offering a customised service; each isproviding its distinct customers with their preferredrequirement, but in very different ways. The Internetaffords opportunities for post-purchase relationshipdevelopment via mass customisation.

Whilst consumer groups are influential in many areasof business, the online user groups involved in Inter-net markets warrant particular attention because oftheir power of communication. The critical role ofvirtual communities in evaluating organisations andproducts before the purchase is mirrored by theactions of user groups in the post-purchase situation.Common in high-tech and industrial markets, whereengineers and scientists trade data and informationabout goods and services, it is increasingly likely thatconsumer products organisations will find them-selves responding directly to the feedback from itsuser groups. The ability to draw customers into aconversation in real time confers tremendous powerson the seller, and requires a proactive approach toafter-sales relationships.

One of the big mistakes made by early sellers on theInternet was their misjudgement regarding thenecessity to continually update their site. Post-pur-chase activity involves consumers returning to thesellers site with queries, for new information, and torepurchase. Such buyers demand to be treated to newinformation at every visit. The Web is littered withthe ‘ghost sites’ of sellers who did not reckon on thelong-term investment in updating their web pres-ence. Such sites are extremely annoying to ‘netizens’,and with their natural concern for time effectivenessin all aspects of their lives, they are unforgiving ofsuch transgressions.

The regular usage of goods and services will deter-mine whether or not customers develop a sense ofloyalty to a good or supplier. Satisfaction-in-use is akey to repeat purchase. Further, innovative ideas areoften driven by customers, underlining the need forcontinuous monitoring of post-purchase activity.Again, the possibilities open to buyers and sellers toengage in real-time communication via the Internetenables such close relations that total satisfaction forcustomers and a stream of useful and insightful feed-back for marketers can ensue.

In strategic terms, marketers must recognise the criti-cal post-purchase dimension of consumer behaviourif they are to take advantage of the potential forrelationship development and customer loyalty andretention. In the marketspace, this requires the adop-tion of technologies that enable the seller to stay withthe buyer after the fact of the sale. Communicationsaccess to and from the customer, and commitment tofostering good relations with the increasingly power-ful consumer/user groups are important strategicconsiderations.

Implications for Marketers

The marketspace is not an electronic replication of themarketplace. The characteristics of the marketspacedemand that marketers revisit and revise theirassumptions and models of the physical marketplacewhen operating in this environment. Whether in thecyber-world or the physical-world, the heart of mar-keting management is understanding consumers andtheir behaviour patterns. We have seen that the fivestages model of consumer decision making capturesthe essence of behaviour in any context, but the man-agement of marketing issues at each stage in the mar-ketspace requires particular attention and approaches.

One management assumption is that communicatingwith consumers is predominantly uni-directional,and that the recipient is largely passive. In the mar-ketspace, however, marketing communication can bebi-directional. That is, the technology exists for con-sumers to engage in an interactive dialogue withmarketing organisations in a more rapid and cost-effective manner than ever before. Such communi-cation enables the development of close relationships,to the point where the marketer can actively antici-pate customer needs and wants. That power providesthe means to deliver satisfaction to the customer evenby pre-empting consumer problems.

It has traditionally been assumed in the provision ofinformation that ‘more is better’. That is, increasingthe amount of information provided would increasethe chances of purchase. However, on the Internet,because information is virtually free and complete,the potential for overload is such that the more infor-mation supplied, the more confused the customer


may become. So, the management of information isno longer about quantity, but about quality. Thatinvolves accessibility, interactivity, functionalityand timeliness.

The physical marketplace imposes limitations oninformation. Economic and access barriers constrainwhat can efficiently be known, and consequentlywhat can realistically be evaluated. On the Internet,however, intelligent shopping agents can scan theentire Web to find the data necessary for comparison.The relevant criteria can be presented and explained,and can be ordered to suit the shopper. Consumerscan now review self-designed tables of data andinformation and source the most appropriate sup-pliers.

The traditional trade-off between the richness and thereach of information no longer holds (Evans andWurster, 1997). In the marketspace the new economicsof information denotes that it is now possible to pro-vide a vast amount of customised and interactiveinformation to a mass audience. Previously, the com-munication of rich information has required proxim-ity and dedicated channels and these have been lim-ited by cost of physical constraints.

Physical limitations were conventionally a primedeterminant of purchase choice. The underlyingassumption about purchase was that increases in dis-tance were accompanied by corresponding increasesin cost of purchase. Geography was the barrier. Onthe Web, it can be argued that every business is aglobal business (Quelch and Klein, 1996). Naturally,physical delivery is a key issue in many industries,but digitisation overcomes many of the traditionalproblems. The assumptions about purchase anddelivery are now very different: new channels andmodes of physical delivery will develop to suit thedeveloping buying processes. It is already clear that

Figure 4 Management Diagnostic for Internet Marketing

home deliveries of almost every consumer productand service are increasingly available.

Whereas it has traditionally been assumed that mar-keting relationships were individual, one-to-one andpersonal, it is now increasingly the case that virtualcommunities and user groups are a primary sourceof strategic marketing relationships. Notwithstand-ing calls for the recognition of broader publics inrelationship development, the organisational level ofthe firm and the organisational level of the com-munity or user group are now critically importantunits of analysis in relationship management.

While business-to-business marketing is relativelywell-developed on the Internet, the same cannot yetbe said of consumer-level commerce. As Peterson etal. (1997) have noted, we are at an early stage in Inter-net development for building an appropriate dedi-cated model of consumer buying behaviour. Decisionsequences will be influenced by the starting point ofthe consumer, the relevant market structures, and thecharacteristics of the product in question. In thispaper, we have considered the conventional frame-work for understanding consumer buying behaviourin extensive and limited problem solving situations,and applied it to the marketspace. The analysis con-firms the centrality of understanding consumermotivations and behaviour patterns to effective mar-keting decisions. The peculiarities of marketing in acomputer-mediated environment do not diminishthat management imperative. Nonetheless, severalkey issues of concern to marketers have been drawnout and discussed. The diagnostic framework in Fig-ure 4 encapsulates those main points.

Acknowledgements

The authors would like to thank Simon Knox for helpful com-ments made on an earlier draft.


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Consumer purchasing on the Internet:: Processes and prospects