“Human rational behavior is shaped by a scissors whose two blades are the structure of task environments and the computational capabilities of the actor.” (Simon, 1990, p. 7)
As the opening quote illustrates, consumer behavior is determined by the interaction between the properties of personal information processing systems and the properties of task environments. Consumer decision processes are constructive in nature — constructed by the decision makers themselves (Bettman et al., 1998) as well as the context of the particular external environment (e.g., information presentation format, time pressure) in which the decisions are made (Bettman, Johnson, Luce and Payne, 1993; Bettman and Kakkar, 1977; Coupey, 1994; Payne, 1982).
From the perspective of consumers, the Internet has changed their relationship with sellers because of the unprecedented increase in the number of choices and levels of control over the message (Sheth and Sisodia, 1999). It has also changed the decisionmaking environment by the amount, type, and format of information available to consumers (Alba et al., 1997; Bakos, 1997) because it provides tools for information storage, for information search and for decision analysis. Tools such as bookmarks, search engines, and decision aids (shopbots) are likely to influence consumer information search behavior. In addition, the Internet has transformed consumer behavior in two ways: (1) transformation of the consumers into online shoppers that requires the usage of computers, and (2) transformation of the physical stores into a marketspace that is information technology intensive (Koufaris, Kambil and LaBarbera, 2001). In order to understand online consumer behavior, it is necessary to include the interaction between the combined roles of consumer/computer user and information technology provided by the online stores. Personal factors such as domain and system expertise as well as system factors such as information load and interruptions will impose certain search costs on consumers and influence online information search.
As a market discontinuity (Mahajan and Wind, 1989), the Internet is likely to have a profound effect on how consumers construct and adjust their decision-making processes appropriately to the new decision-making environment. How are expectations about changes in consumer search behavior being realized in an online environment? The remainder of this chapter presents a conceptual framework to understand consumer search behavior in an online environment.
Figure 1-2 proposes a conceptual framework of consumer information search in an online environment. In the consumer decision process, information search begins when consumers recognize a purchase problem. To solve this problem, consumers have the choice of searching for information from two channels. They can search for information exclusively online or off-line, or in combination (Peterson et al., 1997). The specific choice of information channels is likely to influence the amount of information searched in the Web-based market (Peterson et al., 1997). The process of online information search is characterized by the human-computer interaction termed navigation, which is influenced by system and personal factors. Consequently, these factors will affect the amount of information in an online environment.
Figure 1-2. Conceptual framework of online search behavior
With the Internet as an additional option, consumers can choose (1) whether to focus on a product or service category, or a brand at any stage of the information acquisition process, (2) whether to use the Internet or a conventional retail channel for information acquisition, and (3) whether to use the Internet or a conventional retail channel for the final transaction and brand acquisition (Peterson et al., 1997). There are four possible choice outcomes:
Search online and purchase off-line
Search off-line and purchase online
Search and purchase online
Search and purchase off-line
This chapter only focuses on consumers’ decision to search for information and purchase online.
Purchasing online requires consumers to change their conventional behavior. Behavioral change is difficult and often requires incentives such as explicit monetary savings or increased convenience. Several empirical studies have attempted to provide some insights on the factors influencing consumers to engage in online shopping (Bellman et al., 1999; Degeratu et al., 1999; Jarvenpaa and Todd, 1997).
In their survey, Jarvenpaa and Todd (1999) found that convenience was the single most salient benefit of online shopping. Similarly, Degeratu et al. (1999) found online shoppers to have higher incomes and higher opportunity costs. They are likely, therefore, to be more convenience sensitive and less price sensitive. Bellman et al. (1999) also found that online buyers have “wired lifestyles,” are “time starved,” and “seek new ways to find information and buy things that are faster and more convenient.” In summary, these studies suggest that consumers who decide to shop online often expect minimal external search cost. Therefore, when consumers perceive that shopping off-line is inconvenient, they are likely to use the Internet for information acquisition. In other words, for consumers to search for information online, the perceived external search cost is lower in an online environment than in the physical market.
In the online environment, external search costs have been significantly reduced to mouse clicks. However, information in such an environment is highly visual and perceptual. It is likely to increase cognitive search costs that affect consumers’ search for information. In addition, information search online is characterized by human-computer interaction requiring consumers’ ability and knowledge to acquire information (Hodkison et al., 2000; Spence, 1999). In order to search online, consumers must not only be able to locate the Web sites of interest and move between sites but also to acquire information within the sites. There are several ways to identify the location of Web sites: (1) via search engine, (2) via manual entry of a URL, and (3) via memory-aid of a browser such as bookmarks. Given the vast amount of information available on the Internet, these search techniques will affect consumer information search (Hodkison et al., 2000). As a result, the Internet imposes a certain degree of cognitive search cost on consumers, negatively impacting the amount of information searched.
In the information-rich online environment, consumers need to be transformed as computer users as well (Koufaris et al., 2001). They must be able to identify the location of information and employ efficient search techniques, hence, personal variables such as domain and system expertise are likely to affect consumers’ search for information. Further, coupled with personal variables, system factors such as interruption and information load are likely to impose search costs on consumers and influence the amount of information search.
Domain expertise involves knowledge that allows consumers to solve problems quickly and effectively. It is defined as the ability to identify, evaluate and exploit marketplace opportunities, and consists of mental representations which guide consumer search behavior. The way-finding paradigm suggests that consumers have a cognitive map built on three types of spatial knowledge — landmark, route and survey knowledge (Hodkison et al., 2000; Spence, 1999). This cognitive map consists of a form of “general knowledge of the world that aids humans in navigation tasks” (Dillion et al., 1993, p. 172). For example, consumers may have some knowledge of the use of search engines and of the specific portal sites for a variety of product offerings. Because of this cognitive map, consumers are able to “plan routes, avoid becoming lost, or identify shortcuts” (Dillion et al., 1993, p. 173) during information search. Consumers with broader cognitive maps are able to identify information easily and efficiently.
Apart from the way-finding paradigm, both the economics and psychology literature conceptualize knowledge as product-related knowledge including objective and subjective knowledge (Brucks, 1985). Objective knowledge is conceptualized as what a consumer actually knows, whereas subjective knowledge is defined as the consumer’s perception of the amount of information he/she knows about the product category.
The conceptual relationship between ability and external information search activity is similar (Cacioppo & Petty, 1986). Perceived ability to search is defined as “the perceived cognitive capability of searching for and processing information” (Spreng and Schimt, 1996, p. 248). It involves cognitive processing ability, knowledge of procedures for searching, and knowledge of sources of information (Brucks, 1985). Empirical studies have found knowledge to be positively related with information search in the physical environment (Alba and Hutchinson, 1987; Putrevu and Ratchford, 1997; Urbany, Dickson and Kalapurakal, 1996).
It is necessary to note that knowledge of the electronic environment could precede the knowledge of product categories and thus play an important role in the process of information search in an online environment. In order to search for information online, consumers must know where to search for product category information of interest. In this research, knowledge is broadly defined to include knowledge of electronic markets as well as product categories. Unlike the familiar physical environment, where consumers are exposed to the location of stores in a myriad of ways, exposure to Web sites occurs from more active browsing or bookmarking behaviors. Since the Internet, particularly online shopping, is a new phenomenon, identifying online stores is often aided by directories from portals or advertising media. Therefore, consumers with a higher level of domain expertise will search for more information between sites because they are able to effectively locate the information and evaluate the information in the search process.
In order to search for information in an online environment, consumers must possess a basic capacity to manipulate and interact with the physical interface of a search system. For example, the abilities to begin and end, to read from the screen, to make selections from various types of menus, and manage various functions on the computer are characteristics of system expertise. It is defined as skills needed to use computers as well as navigate the WWW. As Ratchford et al. (2001) point out, fixed cost to using the Internet is high. Not only do consumers need access to a computer system and the Internet but also a considerable amount of knowledge is required.
Similarly, Hodkison et al. (2000) noted that consumers’ search techniques will seriously affect their decision processes. Expectedly, computer skills as well as search techniques are likely to influence consumers’ ability to efficiently locate and search for information and will thus impact the level of perceived search cost.
The distinctive capability of the Internet is to provide access to a tremendous amount of information, including information of low value to the consumer, such as inaccurate search queries, recommendations based on the consumer’s previous purchase, unorganized information, etc. These may increase information load and impose a cognitive processing burden on consumers. Information overload has been found to influence the consumer decision process (Jocoby, 1974; Jocoby, Speller and Berning, 1974) and decrease the amount of information search (Cook, 1993).
In addition, research by Jansen et al. (2000) with the Excite search engine found that consumer queries on the Web are brief. Most users did not go beyond their first and only query. Based on these findings, it is likely that high information load increases external search costs and thus prevents consumers from accessing more information.
The Internet is an interactive information search and decision environment for consumers, providing them with greater control over information. Features such as banner ads, pop-up windows, and intelligent agents that make purchase recommendations are being used frequently by marketers to push information, to attract consumer attention, and to promote sales. Other interactive features such as surveys and user registration act as distractions to the consumers’ search process and further affect their decision performance and satisfaction (Xia and Sudharshan, 2000).
Empirical studies on interruptions indicate they distract subjects from the current activity, and demand the allocation of cognitive capacity for processing the interruption (Kahneman, 1973). An interruption leads to extra time needed for the original task (Laird, Laird and Fruehling, 1983). Additionally, Norman and Bobrow (1975) suggest that interruptions distract attention and place great demands on cognitive processing. In order to keep the consumer motivated, there must be an appropriate level of interruption (Xia and Sudharshan, 2000). Beyond a certain threshold, interruptions may become seriously dysfunctional. As the frequency of interruptions increases, cognitive demand may become very high and the task may become onerous, causing severe frustration. Therefore, it is likely to increase consumers’ perceived search cost and reduce external information search.