Media contact: Grant Madsen (801) 378-9206[email protected]
BYU study reveals attitudes, lifestyles of potential online shoppers
PROVO, Utah (July 9) -- If Internet retailers want sales to meet Wall Street expectations any time soon, they will need to retarget their marketing, address customer fear over credit card security and make the experience less technologically challenging, says a study released today by Brigham Young University's Marriott School of Management.
Funded by IBM, the attitudinal study of 4,000 Web users reveals the shopping behavior of eight online consumer types and which types would respond to marketing efforts designed to increase e-commerce sales. The study also suggests what form those efforts should take.
"Other segmentation studies have been done by commercial research companies, but they focus on demographics like age, income and location. They scarcely look at the lifestyles or attitudinal characteristics that are the true identifiers for the way a people behave,"said business management professor William R. Swinyard, who conducted the study with fellow BYU professor Scott M. Smith.
"In this study we track not only the actual amount of online purchasing people do, we profile individuals using a broad variety of computer literacy and lifestyle variables directed at understanding the psychology of online shopping," said Smith. "We anticipate that somewhere between 65 and 70 percent of all people on the Internet have the potential to become online shoppers, with excess of 40 percent someday shopping regularly."
The study divides shoppers and non-shoppers into eight segments -- Shopping Lovers, Adventurous Explorers, Suspicious Learners, Business Users, Fearful Browsers, Shopping Avoiders, Technology Muddlers and Fun Seekers. Of the eight, Fearful Browsers represent the largest untapped opportunity for e-retailers to win online shopping converts, while Technology Muddlers and Fun Seekers should probably be avoided, said Smith.
Here's how each group looks and how Swinyard and Smith think they should be approached:
* With 11.1 percent of the market share, Shopping Lovers enjoy buying online and do so frequently. They are competent computer users and will likely continue their shopping habits. They also spread the word to others about joys of online shopping whenever they have the opportunity. They represent an ideal target for retailers.
* Adventurous Explorers (8.9 percent) are a small segment that presents a large opportunity. They require little special attention by Internet vendors because they believe online shopping is fun. They are likely the opinion leaders for all things online. Retailers should nurture and cultivate them to be online community builders and shopping advocates.
* Suspicious Learners (9.6 percent) comprise another small segment with growth potential. Their reluctance to purchase online more often hinges on their lack of computer training, but they are open to new ways of doing things. In contrast to more fearful segments, they don't have a problem giving a computer their credit card number. Further guidance and training would help coax them into online buying.
* Among the most computer literate, Business Users (12.4 percent) use the Internet primarily for business purposes. They take a serious interest in what it can do for their professional life. They don't view online shopping as novel and aren't usually champions of the practice.
* Fearful Browsers (10.7 percent) are on the cusp of buying online. They are capable Internet and computer users, spending a good deal of time "window shopping." They could become a significant buying group if their fears about credit card security, shipping charges and buying products sight unseen were overcome.
* Shopping Avoiders (15.6 percent) have an appealing income level, but their values make them a poor target for online retailers. They don't like to wait for products to be shipped to them, and they like seeing merchandise in person before buying. They have online shopping issues that retailers will not easily be able to overcome.
* Technology Muddlers (19.6 percent) face large computer literacy hurdles. They spend less time than any other segment online and show little excitement about increasing their online comfort level. They are not an attractive market for online retailers.
* Fun Seekers (12.1 percent) are the least wealthy and least educated market segment. They see entertainment value in the Internet, but buying things online frightens them. Although security and privacy issues might be overcome, the spending power of the segment suggests that only a marginal long-term payback would be possible.
Charles Reiger, Principal of External Research Relations for IBM's e-business Innovation Institute, says the information gleaned from the study takes companies down previously unexplored avenues of thought when it comes to understanding e-commerce customers.
"Companies don't have a good feel yet for who does or does not shop online," said Reiger. "Dr. Swinyard's research is a start that gives firms a base to develop that understanding. All the implications are yet to be explored."
For the study's purposes, shoppers were defined as male or female household heads with home Internet access who made an online purchase from November to December 2000. Online non-shoppers maintained the same characteristics, the obvious exception being they did not make a purchase during those months.
The study, which was also funded by a J.C. Penny Co. Inc. endowment to BYU's Marriott School of Management, consisted of three focus groups, 40 one-on-one interviews that defined themes of Internet usage, a questionnaire administered to 222 college students about their satisfaction and dissatisfaction with the Internet, 4,000 detailed questionnaires mailed to individuals in 50 state and a second nationwide survey e-mailed to 20,000 internet users.
The researchers found that the average online household checks or sends e-mail messages 2 to 3 times a week, visits Internet sites for hobbies or to play games once a week and visits auctions sites 2 to 3 times a month. Also, about 35 percent of online households buy clothing online, 28 percent buy books and magazines and 23 percent buy music; less than 10 percent buy flowers, tickets or pay for travel.
People like the Internet because it allows them to preview products and get product reviews and recommendations, it provides the convenience of home delivery and removes the hassle of having to drive to go shopping, the study showed.
Things people dislike about purchasing online? Shipping charges, the difficulty of judging the quality of merchandise, the hassle of returning unwanted items and the possibility of credit card numbers being stolen. Swinyard, obviously not a Fearful Browser, is curious about people's aversion to using a credit card online.
"It's odd that we'll give our credit cards to a 17-year-old waiter at a restaurant, but we won't give it to the computer of a professionally managed company. We are unusually fearful about the mysteries of cyberspace. But some of the fears are unfounded and can be minimized."
To view a PowerPoint presentation that details the study results, visit http://www.byu.edu/news/releases/Jul/internet.htm
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