WHAT CUSTOMERS PERCEIVE DURING THEIR ONLINE SHOPPING EXPERIENCE

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1 WHAT CUSTOMERS PERCEIVE DURING THEIR ONLINE SHOPPING EXPERIENCE Chiao-Yun Connie Chang Warwick Business School University of Warwick, Coventry, CV4 7AL, UK ABSTRACT The study examines how consumers process the information available and what their experiences are when exposed to an interactive website. This research utilises data from face-to-face in-depth interviews with over 85 respondents including both the company and consumer sides. The results suggest that customers are likely to engage in more interactions when they purchase service products online. Customers are allowed to do what they want online without having to think about what they are doing. Consumers surfing the web perceive that they have more personal control over the information exchange process. However, it is not a completely positive experience for the customers. More experienced customers state that they felt bored when the environment and process became too familiar and did not provide them with any satisfaction. This is because these customers skills are in excess of the challenges they encounter in cyberspace. It may not take long for these customers to find their desired products online, but they find it to be an efficient process and they are goal-satisfied. 1. INTRODUCTION In recent years, there has been increased interest in building better customer experience among both researchers and practitioners. According to Shaw and Ivens (2002), companies, such as Dell Computers, Starbucks, Hilton Hotels, Hard Rock Café and so on, are shifting their attention from premium prices or superior quality to memorable experiences. Prahalad and Ramaswamy (2004, p.137) point out that value is now centred in the experiences of consumers and this is not only derived from the traditional differentials price, features, quality and service but also emotions. Moreover, Berry et al. (2002) specify the importance of managing the total customer experience, whereby companies should focus on every aspect of the customer experience, including the functional as well as the emotional aspects. The value created by unique or memorable customer experiences and emotions has - 1 -

2 a significant impact on the organisational performance in terms of customer retention, branding and loyalty (e.g. Singapore Airlines and Ritz Carlton Hotel). In the light of this, there needs to be further investigation of how customers assess their experiences and perceive value. This paper begins with a literature review from which a conceptual framework is developed which delineates the factors that influence customer experience and value. Next, evidence from both consumers and service providers is used to show how service providers deliver great experiences to their customers and how customers perceive value from these experiences. Finally, the conclusions drawn from the research are presented 2. CUSTOMER EXPERIENCE Shaw and Ivens (2002, p. 6) define customer experience as a blend of a company s physical performance and the emotions evoked, intuitively against customer expectations across all moments of contact. The way they determine customer experience is in line with Parasuraman et al. s (1985) work that measures the gap between customer perception and expectation of service quality. Shaw and Ivens (2002) emphasize that it is not only physical attributes that contribute to the customers experience but also the customers emotions. Customer emotions are the most overlooked aspects in today s market. It is a real challenge for the service providers to ensure that customers have a great experience when they engage in interactions (e.g. transactions or consultations) with them. From the service operation viewpoint, this creates customers cognitive, emotional and behavioural responses and also customers perceived value about the service process (Edvardsson et al., 2005). Consumer perception is considered to be a process of sensing, selecting and interpreting stimuli in the external, physical world into the internal, mental world (Wilkie, 1994). Consequently, it may be inferred that external signals, such as what consumers experience when they are shopping online, can influence the consumers internal perception of customer value. The traditional shopping experience evolved from a consumer s interactions with a store s physical surroundings, personnel and customer-related services (Kerin et al., 1992). However, electronic technology makes the online shopping experience different from what happens in the traditional store setting. For example, the physical store environment no longer exists, as the shopping experience has been replaced by human-computer interaction. Therefore, all communication activities, which used to happen in physical stores, are converted into text, pictures and video clips. Online consumers are required to help themselves in terms of whatever product or service they need. Moon and Frei (2000) point out that self-service technology is likely to leave customers feeling frustrated and annoyed when their skills (i.e. computer skills) and the challenges (i.e. the shopping task) are not equally matched. Therefore, it is essential to investigate how a website can deliver a favourable customer shopping - 2 -

3 experience. 3. FLOW It is found that flow creates a positive, engaging shopping experience for customers in the online setting (Perry, 2005). This is when customers perceive their shopping experience to be quicker and better because they have enjoyed themselves. It suggests that customers want to revisit and become involved in a playful and exploratory experience because they feel pleasure. Thus, customers engage in online shopping because of the pleasure they gain from the process. Several researchers have supported the role of play in the traditional consumption experience (Holbrook et al., 1984). Flow is defined as the process of optimal experience (Csikszentmihalyi, 1977; Hoffman and Novak, 1996), and it is experienced during the movement through the computer-mediated environment with different degrees of intensity. Hoffman and Novak (1996) describe flow as the glue that holds a consumer in the hypermedia environment and it is not constant, but rather like a tide, when consumers travel through the Internet. It occurs at different levels. Therefore, some interactions within the computer-mediated environment may be more playful and exploratory than others. A number of researchers have found that flow is a continuous variable, ranging from none to intense (Trevino and Webster, 1992). This suggests that not all flow experiences on the Internet will be highly intense. In turn, customers may have different online experiences from time to time. Csikszentmihalyi and LeFevre (1989) suggest that flow extends a sense of playfulness into the online environment. Consumers perceive a sense of control over their interactions, focus their attention on the interaction and find it cognitively enjoyable. It appears that consumers pay attention to the interaction rather than to irrelevant thoughts and perceptions. The issue of what online consumers want includes the ease of ordering, product selection, product information, price, on-time delivery, product representation, customer support, privacy policies and shipping and handling (Tam, 2002). Services, owing to their intangibility, simultaneity in production and consumption and customer interaction during the service operation, are perceived to be high risk and make the customers become more involved in the purchase situations. However, most problems are reduced during online shopping experiences (Pitt et al., 1999). Consumers can experience sounds and sights related to certain products through websites. Therefore, the traditional problems of intangibility and non-perishability are virtually eliminated in some types of services. Smith and Sivakumar (2004) suggest that a short and more intense flow will facilitate the on-time purchases of low-risk products. For low-risk products, the amount of time that consumers need for - 3 -

4 comparing products and browsing is likely to be minimal, as they are already relatively familiar with these low-risk products (e.g. usage or low price). On the other hand, when purchasing high-risk products, consumers may require a longer duration of flow for browsing. This helps the consumers to utilise flow to reduce the perceived risk, while a less intense flow may allow consumers to remain conscious enough to make purchase decisions during the shopping experience. 4. CUSTOMER VALUE Holbrook (1999) states that customer value is an experience. It resides not in the product purchased, nor in the brand chosen, nor in the object possessed but rather in the consumption experience derived therein (Holbrook and Hirschman, 1982; Woodruff and Gardial, 1996). It is different from previous research concerning the dual-component approach that suggests that value is a combination of what is received and what is sacrificed (Zeithaml, 1988; Kotler, 2000; Monroe, 2003). These concepts from the fields of finance and economics may prove helpful in understanding how customers form value judgements based on quality and price. Customers can choose from among alternative service providers based on their return on investment. It is quite common in economics to assume that consumers seek to maximise the ratio of quality to price. However, Holbrook (1999) has a slightly different view of value, which is rooted in Axiology. Abbott (1955, p. 40) points out that what people really desire are not products but satisfying experiences. Experiences are attained through activities. In order that activities may be carried out, physical objects or the services of human beings are usually needed People want products because they want the experience-brining services which they hope the products will render. 6. METHODOLOGY This research used a qualitative research approach, employing in-depth interviews as the main method of data collection. A qualitative research method presents detailed descriptions of consumer behaviour that cannot be measured in a quantifiable manner (Malhotra and Birks, 2000). In-depth interviews were chosen because they uncover greater depth in describing the customer shopping experience and also because they enable a fuller understanding of complex consumer behaviour (Malhotra and Birks, 2000). The semi-structured face-to-face interviews were conducted in both Mandarin and Taiwanese. Data were gathered from both the company and consumer sides to discover the customer experience in the online environment. Firstly, a total of 45 consumers from the north of Taiwan participated in the study. Eligible participants had to be citizens and permanent residents of Taiwan, aged 20 or over. They also had to have made at least one leisure-related online purchase in the last twelve months. People in the travel-related business, such as travel agents, airline staff, hotel employees, advertisers - 4 -

5 and market researchers, were excluded. Next, co-operation was obtained from fourteen travel agencies (marketing managers, IT staff, online travel agents and customer service staff), computer reservation system (flight tickets) staff, IT staff from the hotel reservation system, and academics (40 interviews in total). Seven out of the ten major online travel agencies participated in this research. 7. FIELD STUDY FINDINGS Customers online buying experience consists of everything from information search, product evaluation, decision making, making the transaction, delivery and customer services. Firstly, the findings suggest that telepresence is important because it increases the flow experience. This means that the customers can create stories during consumption. In constructing consumption visions, consumers project themselves into simulated consumption situations; for example, details such as descriptions, photos, and video clips of a hotel give consumers some clues from which to create a vision when evaluating products. This solves the disadvantages normally related to service products (i.e. intangibility), because customers can perceive the immediate physical environment. From the managerial perspective, mangers would like to create an online store atmosphere which may increase customers positive feelings, as this is a travel and tourism website. They understand that, in an e-commerce setting in which the buying process is dis-intermediated or de-personalised, the importance of product attributes is less important. Customers can get the same product from different suppliers, so they may choose a supplier with whom they feel most comfortable. Our company has devoted a lot of money and manpower to designing and testing our website. We see a number of successful websites all over the world (e.g. amazon.com). Because it is a tourism website, we aim to create a different atmosphere compared to other grocery and computer software websites. We want our customers to enjoy surfing rather than compare prices unlike the way in which consumers buy software, they just want to go for the lowest one. Since, every supplier sells the same product. We want to wish our customers happy shopping. As Sheridan (1992) points out, a strong sense of telepresence is induced by vividness. When consumers use a website, they will always experience some level of telepresence. The higher the level of telepresence is, the stronger the flow. In this research, customers may not experience the same level of telepresence but they enjoy the vision, being unaware of flow. They believe this results in good website design, and they simply feel that the website is user-friendly. Another finding suggests that customers focus on the experience of shopping rather than comparing - 5 -

6 product attributes online. Typically, shopping for service products presents a range of challenges for individual consumers. However, most service problems are greatly reduced during the on-line shopping experience (Pitt et al., 1999). Through the advanced technology created by the World Wide Web, consumers can now experience the sights and sounds related to particular service products. It is difficult to provide a test drive for some service products, but one alternative is to provide customers with more information in order to stimulate their purchase intention. This helps customers to envisage how products and services can create both positive experiences and value for individuals. For example, experiences based on pictures, films, music and activities might also be considered to be intangible because they assist customers in imagining and may play a role in the communicative stage, creating a realistic pre-purchase experience. Some of the intangible attributes have a direct impact on the customer experience, whereas others only exert a more indirect influence. Next, consumers surfing the web perceive more personal control during the information exchange process and its outcomes are a high levels of interactivity as compared with low levels of interactivity. Interactivity, however, is not all positive for the consumers. Interactive media also require consumers to invest processing resources in managing the information flow. As Perry (2005) observed, when customers perceive their shopping experience to be better, customers are likely to engage more and in greater depth in the e-business setting. Since customers tend to engage deeply in online shopping, this suggests that customers may buy more and more products from e-retailers. Moreover, some more experienced customers claim that they feel bored when the environment and process became too familiar and provide less satisfaction. This becomes a routine task (i.e. going to a supermarket to do the weekly shopping). This is because these customers skills are in excess of the challenges they encounter in cyberspace. It may not take long for these customers to find desired the products online but they feel efficient and goal-satisfied. Finally, the findings indicate that customers are likely to facilitate a long duration and less intense flow when purchasing high-risk products. Most customers choose to purchase tourism products online because they require more time and resources to make their decisions. If the information is overwhelming, it is hard for customers to digest it well. As consumers experience a sense of control and freedom in managing the flow, it takes longer for them to make their decisions. 8. CONCLUSION Traditionally, the experience concept is used to describe and understand experience-intensive situations when people integrate what they perceive and encounter in accordance with a script, both during and after consumption. In this work, the focus is on the customer s service experience prior to their purchase and service consumption. In the e-commerce setting, customers interact with websites - 6 -

7 and plan their journey by themselves. Interactions with salespeople have thereby been reduced. The findings suggest that flow represent a desirable and pleasant feeling online but consumers may experience this differently from time to time. It also affects a customer s information processing actions, product evaluation and judgement. The findings suggest that customers may not be aware of the nature of flow, but simply find that the shopping process is smooth and that the website is easy to use. Further study in this area may be required. This is a pilot study, utilising qualitative research methods (i.e. interviews and observations) to gather information and form hypotheses. In the future, it would be beneficial to test the same area in a quantitative manner. 9. REFERENCE 1. Abbott, L. (1955). Quality and Competition. Columbia University Press, New York. 2. Berry, L. L., Carbine, L. P. and S. H. Haeckel (2002). Managing the Total Customer Experience. Sloan Management Review, 43(3), Csikszentmihalyi, M. (1977). Beyond Boredom and Anxiety. Jossey-Bass, San Francisco. 4. Edvardsson, B., Enquist, B. and R. Johnston (2005). Co-creating Customer Value Through Hyper-reality in the Pre-purchase Service Experience. Journal of Service Research, 8(2), Hoffman, D. L. and T. P. Novak (1996). Marketing in Hypermedia Computer Mediated Environment: Conceptual Foundations. Journal of Marketing, 60(3), Holbrook, M. B. (1999). Consumer Value A Framework for Analyse and Research. Routledge, New York. 7. Holbrook, M. B. and E. C. Hirschman (1982). The Experiential Aspects of Consumption: Consumer Fantasies, Feelings and Fun. Journal of Consumer Research, 9(), Kerin, R. A., Jain, A. and D. J. Howard. (1992). Store Shopping Experience and Consumer Price-Quality-Value Perceptions. Journal of Retailing. 68(4), Kotler, P. (2000). Marketing Management. 10 th Ed. Prentice-Hall, New Jersey. 10. Malhotra, N. K. and D. F. Birks (2000). Marketing Research: An Applied Approach, European Ed, Pearson Education Limited, Essex 11. Monroe, K. B. (2003). Pricing Making Profitable Decisions, 3 rd Edition. McGraw-Hill, New York. 12. Moon, Y. and F. X. Frei (2000). Exploding the Self-Service Myth. Harvard Business Review. 78(3), Olson, J. C. and T. J. Reynolds (1983). Understanding Consumers Cognitive Structures: Implications for Advertising Strategy. In Advertising and Consumer Psychology, Percy, L. and A. Woodside (Eds). Lexington Books, Lexington, MA. 14. Perry, C. (2005). Shoppers Respond to a Good Experience in Any Channel. New Media Age, - 7 -

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