Principles For Building Successful Internet Ventures:
Understanding What Consumers Do When They Buy
Bruce D. Weinberg
Associate Professor of Marketing & E-commerce
Co-Director, Consumers and Technology Research Group
McCallum Graduate School of Business
Bentley College
Celtics@Bentley.edu
781-891-2276
Bruce D. Weinberg
Copyright 2003
Bruce D. Weinberg
• Background: Computer Science, Mathematics and Marketing.
• Designed computer-based auto shopping system at MIT in late
1980s.
• Curious:low online-retail sales & high online-consumer
dissatisfaction.
• Internet Shopping 24/7 Project 1-year ethnographic study
www.InternetShopping247.com
• Research, teaching and opinions reported in Wall Street Journal,
MSNBC, Associated Press, Inc. Magazine, NPR, Business 2.0,
etc.
• Research, consulting, presentations and special events with
General Motors, e-General Motors, Accenture, Booz-Allen &
Hamilton, Microsoft, Wall Street Journal, Harvard Business
School, Forrester Research, Inc. Magazine, Women in
Communication, etc.
Bruce D. Weinberg
Copyright 2003
Presentation Agenda
• Introduce Key Principles
• Consumer Buying Decision Process
• Three Successful Internet Ventures
- eBay
- Expedia
- NetFlix
• Question & Answer
Bruce D. Weinberg
Copyright 2003
Key Principles
• "Trust reduces the frictions in commerce"
- Kenneth J. Arrow
1972 Nobel Laureate in Economics
• Value = f (Benefits, Costs)
• Understand and satisfy consumer needs
• Consumer Buying Decision Process
• Human interactions supported by technology
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Overview
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• This is what consumers do.
• This will not change.
• Recognize this or be ignored.
• Enables systematic approach for:
- attracting and satisfying customers, and
- maintaining healthy customer relationships.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Processes related to the realization that a
problem or need exists, e.g., thirst and
hunger.
• Stimulated by internal or external
sources.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Seeking and gathering information believed
to be relevant and useful to solving a
problem or satisfying a need, e.g., reading
Consumer Reports, talking to other
consumers, visiting a firm's Website.
• Sources may be defined as either
marketer or nonmarketer based.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Analyzing products and merchants on their
various strengths and weaknesses and
applying choice decision rules, e.g., buy the
lowest price alternative.
• Preferences & Tradeoffs.
• Many Approaches: Rational, Holistic, etc.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Processes related to the payment and
acquisition of product.
• Finding, Inspecting, Selecting, Holding,
Ordering, Discounting, Paying, Waiting,
Tracking, Wondering, Possessing,
Confirming, etc.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Behaviors related to both the felt comfort
and satisfaction levels with the purchase
experience and decision.
• Evaluate, Use, Form Questions, Spread
Word of Mouth, Buy Again, Return,
Complain, Praise, Exchange, Repair,
Discard, Wants Hand Held Through Fear,
etc.
Bruce D. Weinberg
Copyright 2003
Consumer Buying Decision
Process
Bottom Line
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
When you know what consumers do, you can
create environments and tools that make it
easy for them to:
•
•
•
•
Progress within a buying stage.
Progress to another buying stage.
Stay with you.
Return to you.
Bruce D. Weinberg
Copyright 2003
eBay
For Buyers
• Easy to find all types of products
• Personal service
• Fun buying experience
• Community standing and help
• Reputation system on seller performance
• Opportunity to sell
Bruce D. Weinberg
Copyright 2003
Expedia
• Expert Searching and Pricing (Value) platform
- Fare searching engine
- Schedule searching
- Dynamic Bundling travel services real time
• Full information availability
• 24/7 access
• Easy comparisons
• Consumer control
Bruce D. Weinberg
Copyright 2003
Netflix
• Great selection &
(in spirit)
No stock outs
• Flexible search for movies
- Category, actor, director, alphabetically
• Keep as long or as short as needed
• No more late fees
• Community
- Learn about movies
- "Word-of-Web" Reviews/Opinions
• Cinematch recommendations
Bruce D. Weinberg
Copyright 2003
Best Practices in Supporting
Consumer Buying Decision Process
Bruce D. Weinberg
Copyright 2003
Best Practice
Problem/Need
Recognition
•
•
•
•
Information
Search
Alternative
Evaluation
Post
Purchase
Purchase
Easy browsing and discovery
Serendipity and fun
Point out what can be done/purchased
Guide quickly to problem/need
Bruce D. Weinberg
Copyright 2003
Best Practice
Problem/Need
Recognition
•
•
•
•
•
•
•
•
•
•
Information
Search
Alternative
Evaluation
Post
Purchase
Purchase
Search feature.
Navigation based on consumer mental model.
Contact us, phone, email, chat, fax, address.
Reply, reply quickly, answer question asked.
Fast loading webpages.
Decision-supporting information.
Let everything be seen and location in site (Site Map).
Online guidance, e.g.,pushing webpages.
NonMarketer information, e.g., consumers.
About us.
Bruce D. Weinberg
Copyright 2003
Best Practice
Problem/Need
Recognition
•
•
•
•
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
By key decision making criteria
By behavior/characterization
Ability to specify preferences
Iterative/interactive inference
Bruce D. Weinberg
Copyright 2003
Best Practice
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Keeping shoppers in the aisles when they put something in
the cart.
• Provide all order-related information and costs.
• Shipping information quickly available.
• Indicate location in in multi-step purchase process.
• Easy, fast checkout.
• Fulfillment status.
• Keep your promises, e.g., security, delivery, product
displayed, arrive in "new" condition, etc.
Bruce D. Weinberg
Copyright 2003
Best Practice
Problem/Need
Recognition
•
•
•
•
•
•
•
•
•
•
•
•
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
Simplify product returns and exchanges.
Easy to find service needed.
Put directly in touch with service person.
Email is cool if ok'd or if relevant.
Appreciate and respect the customer.
Treating the customer well.
Learn about customers beyond their clicks.
Calm my fear; break my inertia; get me online.
Private means private.
Repeating information is a hassle.
Don't respond to calls for assistance.
Company rules over customer satisfaction.
Bruce D. Weinberg
Copyright 2003
Summary
• Consumer Buying Decision Process
Problem/Need
Recognition
Information
Search
Alternative
Evaluation
Purchase
Post
Purchase
• Powerful and systematic framework for:
- Understanding online consumer behavior,
- Creating valuable consumer experiences,
- Maintaining healthy customer relationships.
• Act and think like a consumer.
Bruce D. Weinberg
Copyright 2003
Thank You Very Much
Any Questions?
Bruce D. Weinberg
Copyright 2003