Chapter 7 Objectives

After reading Chapter 7, you will be able to: Discuss general statistics about the internet

population. Describe the internet exchange process and the

technological, social/cultural, and legal context in which consumers participate in this process.

Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange.

Highlight the four main categories of outcomes that consumers seek from online exchanges.

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The Customer’s Story

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A typical one-hour adventure in the life of a 25-year-old professional male, Justin: Tunes his iPod to the latest Diggnation

podcast while his TV is tuned to a soccer game and his cell phone and PC are within reach.

Picks up his computer to find a blog mentioned during the podcast, sees a video on the blog, and texts a friend about the video.

The Customer’s Story, cont.

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Justin searches for the video title on Google and finds a job posting on Vimeo, an online video-posting site.

He posts a link to the video and Vimeo site on his Twitter stream.

Justin is the new consumer: a multitasker interested in the social media.

How can a marketer capture dollars from these behaviors?

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71% of U.S. consumers use the internet; the other 29% can be characterized as: Net evaders Net dropouts Truly unconnected Intermittent users

Consumers in the 21st Century

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Consumers in the 21st Century, cont.

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In 2007, 1.4 billion people had access to the internet, 19% of the global population.

Ten countries account for 53% of all global users and adoption rates range from 69-88%.

Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the internet.

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Exchange is a basic marketing concept. It refers to the act of obtaining a desired

object by offering something in return. Exchange occurs within the following

contexts: Technological Social/cultural Legal

The Internet Exchange Process

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Technological Context

50% of online Americans connect to the internet at home with a broadband connection.

Broadband users enjoy more multimedia games, music, and entertainment than do those accessing from a mobile device or 56K (dial-up) modem.

The typical U.S. home has 26 different electronic devices for media and communication. Consumers spend an average of 1.5 hours online

daily.

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Social and Cultural Contexts

One of the most important social trends is that consumers trust each other more than they trust advertising or companies online.

Social/cultural trends have a huge effect on online exchanges. Sophisticated consumers. Information overload overwhelms

consumers. Multitasking speeds up normal processes

and lowers attention to each task.

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Social and Cultural Contexts, cont.

Home and work boundaries are dissolving.

Consumers seek convenience and have high expectations regarding customer service.

Consumers cannot do without internet access: “online oxygen.”

Self-service is required. Privacy and data security are paramount. Online crime worries consumers.

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Despite piracy laws, illegally used software abounds.

In spite of the Can-Spam law, the number of unsolicited emails has increased.

However, when the recording industry sued thousands of illegal music file downloaders, consumer behavior changed. In 2002, 37% of online consumers shared

music files. Only 23% shared files in 2004.

Legal Context7-10

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Individual characteristics affect internet use. Age, income, education, ethnicity,

and gender. Attitudes toward technology. Online skill and experience. Goal orientation. Convenience or price orientation.

Individual Characteristics & Resources

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Consumer Resources

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Consumers perceive value as benefits minus costs.

These costs constitute a consumer’s resources for exchange: Money Time Energy Psychic costs

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The internet exchange doesn’t use cash or paper checks for online transactions.

There are many forms of digital money. Credit and debit cards. Electronic checks through a third-party such

as PayPal. Smart cards or Splash Plastic. Other innovative forms are appearing in

other countries. In South Korea some mobile phones have chips

that allow vending machine purchases by phone.

Monetary Cost7-13

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Online attention is a desirable and scarce commodity.

Worldwide, the average user goes online 34 times/month, 69 minutes each time, visiting over 1,500 Web sites.

Some researchers believe that consumers pay more focused attention online than with other media. Hoffman and Novak applied the concept of

flow to online behavior.

Time Cost7-14

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Energy and Psychic Costs

It takes effort to log on and check e-mail, especially for dial-up users. Short text messaging (SMS) via cell phones

and PDAs is becoming more popular. Consumers apply psychic resources to

understand information or when facing technical problems.

Shopping cart abandonment and failed online purchases have numerous causes. Technical reasons Marketing problems

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Exchange Outcomes

There are 5 basic things that people do online: Connect Create Enjoy Learn Trade

Each is ripe with marketing opportunity.

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