CONSUMER BEHAVIOR ON THE INTERNET B70.2348
	OBJECTIVES This course is designed to describe consumer behavior theories that might provide a better understanding of consumer behavior on the internet, and in so doing, develop applications in areas such as web site development, advertising content, synergies between web sites and brick and mortar establishments, building consumer relationships, and reducing consumer risk. The internet is a revolutionary medium in providing consumers more information and empowering them to broaden their range of alternatives. The basic presumption is that existing consumer behavior principles can apply to behavior on the internet based on the way consumers make decisions, identify their needs, acquire information about product alternatives, evaluate these alternatives, and assess their level of satisfaction after making a decision. The key is to be in a better position to develop marketing strategies based on the application of sound behavioral principles. The first part of the course deals with the conceptual foundations, namely applications of behavioral principles to internet behavior. The second part considers strategic applications of these behavioral principles. Students will complete a term project to develop strategic recommendations for an e-commerce business based on consumer research. This research will require developing a basic concept of an e-commerce business or service and testing the concept on consumers through a series of focus group interviews. Cases and readings from the current periodical literature will provide the focus on applications. COURSE REQUIREMENTS 1. Course Project: 50% (Interim report 15%; final report 25%; presentation 10%) The major requirement is a comprehensive course project requiring the development of marketing strategy recommendations for an e-commerce business based on an understanding of consumer needs and attitudes. Teams of three to four students will complete the project. There will be a presentation at the end of the term. The project is described in full in the "Project specifications" handout. Briefly, the project will require: Identifying a Web-based opportunity in one of the following areas: (a) defining a new e-commerce business; (b) improving the facilities for an existing e-commerce business or (c) extending a traditional business to provide an e-commerce capability. Doing a situation analysis based on existing sources of information so as to better define your Web-based area of opportunity. Completing several focus group or individual interviews to determine the dimensions of consumer needs for the e-commerce service you are proposing, and reactions to the proposed offering. Providing strategic recommendations based on your understanding of the consumer. The project will require: - A two page proposal to be submitted session 6, Feb. 13. In the proposal, you should briefly define the Web-related area of opportunity why it was chosen strategic issues associated with the defined area of opportunity particularly as they pertain to : delivering customer value : developing a competitive advantage - Submission of an Interim Report not to exceed 10 pages excluding appendices. Due session 13, March 20. - Final report not to exceed 20 pages excluding appendixes. Due session 25, May 1. 2. Case Evaluations (30%) You will be asked to prepare two cases: - Bizrate.com, due session 10, Feb. 27 - Clust.com, session 17, April 3. Cases should be no more than 5 pages in length, excluding exhibits and references. Questions to be addressed in the case are listed in the syllabus under the appropriate sessions. 3. Class Participation (20%) This is an interactive course. Class discussion will focus on cases, readings and web assignments. Much of the class time will be devoted to these discussions, making it critical that these materials be read and prepared in advance of class. Since class participation is an important component of the grade, if you have a legitimate problem in participating, please see me the first few sessions, and we will arrange some alternative. During the course of the discussion, you will occasionally be asked to comment, even if you do not volunteer, to make sure the same individuals are not always called on. Evaluation of class participation will be based on: - Contribution to the course: Discussion of readings, assignments and cases, and suggestions regarding course content. . - Attendance: Regular attendance is expected given the importance of class participation. Since the class meets only once a week, absence from more than two class sessions (i.e. more than 20% of the classes) could have a negative impact on class participation. If you expect to be absent from more than two classes please advise me. 4. Peer Evaluations Evaluations of team members will be optional and can be submitted at mid-term and at the end of the term. Fortunately, most teams work well together. If there are any problems, it would be best if they were brought to my attention by mid term. 5. Web Assignments You will be asked to review Web sites for many of the sessions in the course. You will be expected to provide feedback in class based on these reviews. Web assignments are described by session below. REQUIRED MATERIALS Five cases to be purchased from the bookstore. The following should be picked up in the Marketing Department (preferably before the first class) - Selections from Henry Assael, Consumer Behavior and Marketing Action, South-Western College Publishing, 6th ed, 1998. - A packet of readings - Specifications for course project - Project materials handout - Copies of Powerpoint slides SUMMARY OF SUBMISSION DATES Project proposal, Session 6, Feb. 13 Interim report, Session 13, March 20 Final Report, Session 25, May 1. Bizrate.com case, session 10, Feb. 27 Clust.com case, session 17, April 3
	SUMMARY OF CLASS SESSIONS
	I INTRODUCTION Jan. 30 1. Nature of Course 2. Micromarketing and Mass Customization Feb. 6 3. Project Orientation 4. Types of Decision Making A. Product Involvement B. Decision Making vs. Habit II CONSUMER DECISION MAKING Feb. 13 5. Risk Factors on the Web Case: Double Click 6. Guest speaker: Pat Breman, Stanford Research Institute "Identifying Market Segments for Online Targeting [SUBMIT PROJECT PROPOSAL] Feb. 20 7. Information Search and Brand Evaluation 8. Guest Speaker: Rob Leathern, Jupiter Research "The Role of Shopping BOTS in Online Decisions" Feb. 27 9. Components of Decision Making: Consumer Needs and Perceptions 10. Case: Bizrate.com (SUBMIT IN WRITING) March 6 11. Purchase Outcomes: Post-Purchase Evaluation & Brand Equity 12. Guest Speaker: Dave Cheifetz, McKinsey & Co. "Relationship Marketing: Web-Based Strategies to Retain Consumers" III PURCHASE INFLUENCES: INDIVIDUAL AND GROUP March 20 13. Demographics and Life Styles on the Web 14. Case: Alloy.com [INTERIM REPORT DUE] March 27 15. Group Influences on the Web: Word-of-Mouth and Personal Influence 16. Guest Speaker Reg Hamlett, Focus 5 "Establishing Virtual Communities on the Web April 3 17. A. Group Influences: Diffusion Processes Case: Clust.com (SUBMIT IN WRITING) 18. Rules Based Systems and Collaborative Filtering Case: Broadvision Case Moderator: Ken Cassar, Jupiter Research IV STRATEGIC APPLICATIONS April 10 19. Brand Building on the Web: Case: Gap.com 20. Guest Speakers: Bob Alexander, Alexander & Associates and Brenda Smith, Prophet Brand Management " Brand Building on the Web" April 17 21. Effectiveness of Web Advertising Guest Speaker: Nick Nyhan, Dynamic Logic "The Future Role of Web Advertising" 22. Web site Development Guest speaker: Michael Summers, Scient.com "Developing Web Sites For Consumer Decisions" April 24 23. International Web Usage Guest speaker: Evan Neufeld, Jupiter Research "Diffusion of Worldwide Web Usage" 24. GROUP PRESENTATIONS May 1 25 & 26 GROUP PRESENTATIONS (final report due) May 8 27. IN LIEU OF FINALS: GROUP PRESENTATIONS   DETAILED SCHEDULE: READINGS, WEB AND CASE ASSIGNMENTS I. INTRODUCTION 1. Nature of course and requirements: Jan 30 Readings: - Assael, Chpt. 1 - Reading #1: "Regarding Customers as Business Collaborators" Is the internet shifting the balance of power from manufacturers to consumers? How? How can companies channel consumer power to their benefit? - Reading #2: "How to Reach John Q Public" Do the four criteria listed in the article define why many dot.coms failed in the "Internet Bust?" On this basis, what consumer needs is the internet likely to satisfy over the long run. 2. Setting the Stage: Micromarketing and Mass Customization: Jan 30 Readings: - Reading #3: "All Yours" What would be required for a car manufacturer to sell direct to the consumer on a customized basis? Are there economic advantages in selling direct? Disadvantages? What are the measurement implications of mass customization for profitability? - Reading #4: "The New Marketing" How are the rules of marketing changing because of business Webs? - Reading #5: "Alternatives to Mass Customization" What types of products are mot likely to be mass customized? Is customization a function of consumer involvement with the product? 3. Project orientation session: Feb 6 Readings: - Reading #6: "Divided We Stand" 4. Guest Speaker: Pat Breman., Stanford Research Institute "Identifying Market Segments for Online Targeting" Feb. 6
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	II. CONSUMER DECISION-MAKING AND THE INTERNET 5. Types of Consumer Decision Making:Consumer Involvement, Decision Making, and Habit Feb. 13 Readings: - Assael, Chpts. 3 - 5 - Readings #7 & 8"Online Luxury Has Limits" & "Too Good for the Web The article says the Web is best for standardized products. Do you agree? What are the pros and cons of selling luxury items on the Web What are the relative advantages of brick & mortar establishments relative to pure internet sites in selling luxury items? - Reading #9: "Why Shoppers' Loyalty…" Why are consumers loyal to specific Web sites? What can Web marketers do to draw these loyalists away from competitive sites? Web Assignments: 1. Visit www.roche-bobois.com and www.ikea.com . Does one site reflect hedonic involvement and the other utilitarian involvement? In what ways? 2. Visit www.nextmonet.com and www.luxuryfinder.com Who is most likely to buy from these sites? What is the difference between the two sites? 6. Risk Factors on the Web Feb 13 Readings: Assael, pp. 99-102 CASE: Double Click (Read #10, "A Privacy Firestorm at DoubleClick" in conjunction with the case.) 1. Was there a threat to consumers when DoubleClick acquired Abacus? 2. Should there be a legal prohibition against linking personal information to Web sites traveled? 3. Is DoubleClick's privacy policy adequate in responding to consumers' concerns? Reading #11: "As Big PC Brother Watches, Users Encounter Frustration" Although privacy is a significant concern, consumers do not do very much to insure it. Why? SUBMIT PROJECT PROPOSAL 7. Information Search and Brand Evaluation Feb 20 Readings: - Assael, pp. 80-99 - Reading #12: "Exploration of World Wide Web Tilts From Eclectic to Mundane" How has internet search changed as the Web has matured? Do you predict these trends will continue? - Reading #13: "Three Clicks of the Apocalypse Is there a role for impulse buying on the Web? - Readings #14&15: "The Twisting Path to the New Front door" and "Give us Choices, Yes, But Not too Many" What are the differences in the contest of information search in the two articles? What are the implications for Web marketers? - Reading #16: "Out of Order" Web Assignment: Visit www.shopping.yahoo.com and click on laptop computers.Visit the sites under the "research" section. Then fill out your preferences in the "search by features" section. Does the site provide for information search facilities for both novices and experts? Does the site provide for a compensatory screening procedure? What other sites would you recommend to both novices and experts for additional information search? Is Yahoo a credible and unbiased party in providing information search? 8. Guest Speaker: Rob Leathern, Jupiter Research, "The Role of Shopping BOTS in online decisions" Feb 20 9. Components of Decision Making: Feb 27 Readings: - Assael, Chpt. 7; (Chpt. 6 - skim) - Reading #17: "No More Free Lunch" What are the problems with discounts and freebies on the Web What are the implications for customer retention strategies? - Reading #18: "Marketing Meets Psych 101" What are the implications of the article for establishing brand loyalty for pure dot coms? Web Assignment: Go to the www.activebuyersguide.com/ Web site. Select a product category. Click on decision guide and go through the various steps to receive a product recommendation. (The process is rather tedious, so try to short-circuit it by selecting the default options when reasonable. You will have to provide some innocuous info to get a recommendation, so privacy should not be a problem.) Do you feel the steps required to receive a product recommendation are reasonable. Evaluate the trade-off procedure. Did it seem to influence the recommendations on the web site? Compare the site to www.shopping.yahoo.com. Which site do you prefer for brand evaluation? Why? 10. CASE: Bizrate.com [SUBMIT IN WRITING] Feb 27 What value does Bizrate provide consumers? How does the value Bizrate provide compare to that provided by Gomez Advisors? How does Bizrate affect the merchant's relationship with its customers? In what ways is Bizrate "the antidote to Amazon" and similar to eBay? What are the differences in Web site loyalty for Bizrate vs. Amazon? Did Red October add value for consumers? For merchants? How?   11. Purchase Outcomes: Post-Purchase Evaluation & Brand Equity March 6 Readings: Reading #19: "Between the Lines" Is the internet a more powerful medium to establish loyal consumers over time & thereby increase brand equity? Why or why not? Why might click & mortar retailers be better able to retain customers over the long term? What is meant by "bridging the gap between above the line and below the line marketing activities" in establishing loyalty on the Web? Reading #20: "Wherefore the Web?" Is Forrester's Site Necessity Index (SNI) a reasonable measure of the necessity for a Web site? Does the measure explain why leading brands like Nike and Coke are not frequently visited? Reading #21: "Relationship Revolution" What is meant by adding relationship equity to brand equity? What is meant by making the interactive process the product? Does the article imply a distinction between brand & customer equity? Web Assignment: Visit www.support.dell.com. Click on (1) solutions, (2) "reference" and (3) "customer care." Do these features help Dell manage relationships with their customers? How? 12. Guest Speaker: Dave Cheifetz, McKinsey & Co. "Relationship Marketing: Web-Based Strategies to Retain Customers" March 6
	III. PERSONAL INFLUENCE AND THE INTERNET 13. Demographics and Life Styles on the Web March 20 Readings: - Assael, chpts. 12 & 13 - Reading #22: "Divide and Culture" What are the dimensions of the digital divide? What are the differences between African-Americans & Hispanic-Americans in Web Usage? In attitudes towards the Web? Web Assignments: 1. Visit www.carsmart.com and www.womanmotorist.com. Should there be a separate web site or women or the purchase of a new car? The Womansmotorist site is sponsored by carsmart. Why does the company need two sites? How does the "women's interest" section on the carsmart site differ from the "womansmotorist" site's approach? 2. Identify a Web site that reflects a "subculture of consumption," that is, a site that revolves around a product or set of products with the following characteristics: The product category serves as a life style focus Social interactions revolve around the product The product defines a common value system Interest in the product results in a social hierarchy related to expertise. - In what ways does the site you selected reflect the above characteristics? - What are the implications for marketing strategy on the Web? 3 Visit the following sites: www.bananarepublic.com; www.gap.com; www.oldnavy.com. Gap Inc. has established these three divisions to appeal to different socioeconomic segments from high to low. Do the three Web sites reflect this positioning? Do the sites appeal to different age cohorts? Do they appeal to different life style segments? 14. CASE: Alloy.com March 20 Case Moderator: Dan Pelson, President, Bolt.com [Read #23 "Young and Restless" in conjunction with case] What value does Alloy provide the Generation Y market? Is Alloy successful in delivering community and content to fill the needs of this segment? How would you compare Alloy's branding strategy to dELIAs? How can Alloy market to Gen Y more effectively? Should Diamond accept the AOL deal? SUBMIT INTERIM REPORT 15. Group Influences: Word of Mouth on the Web March 27 - Assael, pp. 150-154 - Reading # 24: "Cracking the Niche" What kinds of marketers are likely to target Web communities? Why is targeting communities likely to be a profitable strategy? What are the problems with such targeting. What is the role of Permission Marketing vis a vis Web communities? - Reading #25: "Pass It On" What kinds of products are best suited for viral marketing? What kinds of consumers should be targeted with viral marketing strategies? Web Assignments 1. Visit www.Epinions.com. - Does the site reflect word of mouth influence? - Would you use the opinions expressed on the site in your purchasing decisions for any of the products listed? 2. Visit http://geocities.yahoo.com. Go to the Member Page Directory and type in an area of interest (snorkeling, picking mushrooms, etc.) Did you find any connections of interest? Is the site a good vehicle for connecting with others with similar interests? If you are an ardent enthusiast of a certain topic, are you likely to establish your own site to connect with others?
	16. Guest Speaker: Reg Hamlett, Focus 5 "Establishing Virtual Communities on the Web" March 27 17. Group Influences: Diffusion Processes April 3 Readings: - Assael, pp. 155-164 - Case: Clust.com [SUBMIT IN WRITING] What value does Clust.com provide consumers. Are there any risks to consumers in using Clust.com? What kinds of consumers is Clust.com most likely to attract? What types of products are most likely to be bought on the site What relationship strategies can clust.com use to retain customers Why did clust.com survive the dot.com bust whereas Mercata folded. Is clust.com likely to continue to survive? - Reading #26: "Has Growth of the Net Flattened?" and "Forecasting Online Shopping" Is the Web following the traditional adoption curve? What stage in the diffusion process are we at? Early adoption, early majority, late majority? What are the implications for e-tailers like Amazon?
	18. Collaborative Filtering VS. Rules Based Systems: April 3 Readings: CASE: BroadVision CASE MODERATOR: Ken Cassar, Jupiter Research Note: Go to the following Web site to print out the case: http://gobi.stanford.edu/personalizationUser Name: personal! Password: personal! [Read # 28 and 29 in conjunction with case.] How does Collaborative Filtering provide consumers with added value? What might be the downside to consumers of using Collaborative filtering programs. What are the pros and cons of rules-based vs. collaborative filtering systems in assisting consumer purchase decisions What types of products are best suited for collaborative filtering systems? Rules based systems? What is the rationale for the "Inside" strategy for BroadVision? IV STRATEGIC APPLICATIONS 19. Brand Building on the Web April 10 Web Assignment: 1. Review the following sites for this class: www.ivillage.com and www.barnesandnoble.com 2. Find a site for an existing brand that you believe : does a good job in supporting its brand equity : does a poor job in supporting its brand equity. Why does one site do a better job than the other in supporting brand equity? Case: Gap.com [Read #30: "Gap's Image is Wearing Out," in conjunction with the case.] Does Gap.com conform to the eight criteria reviewed in class for a successful online retailer? Are online operations likely to cannibalize offline sales? Should Such cannibalization deter Gap from growing its online operations? How can Gap develop a relationship marketing strategy to retain customers over the long term. Recently, Gap's store sales have decreased sharply. Is this likely to affect online operations as well? 20. Guest Speakers: Bob Alexander, Alexander & Associates and Brenda Smith, Prophet Brand Management "Brand Building on the Web" April 10 Readings: Reading #31: "Online Evolution" 21. Effectiveness of Web Advertising April 17 Guest Speaker: Nick Nyhan, Dynamic Logic "The Future Role of Web Advertising" Readings: - Assael, Chpt. 11 - Reading #32: "Featuring Nick Nyhan" - Reading #33: "Madison Avenue Fights Back" What are the problems with Web advertising? How are large advertisers using the Web more effectively? 22. Web Site Development April 17 Guest Speaker: Michael Summers, Scient.com "Developing Web Sites for More Effective Consumer Decisions" - Reading #34: E commerce Report: Easier to Use Sites" What problems are cited in Web site design? How are these problems likely to impact on consumer perceptions and decision making? What are the implications of a broader consumer base gaining access to the Web? - Reading #35: Clutter vs. Clicking in Web Design" Why have so many leading Web sites chosen to clutter their home page? 23. International Web Usage April 24 Guest Speaker: Evan Neufeld, Jupiter Research "Diffusion of Worldwide Web Usage" Reading #36: "Global Online Ad Revenue" Web Assignment: Visit www.harleydavidson.com and click on three countries' sites as well as the US home page. Why do you think the pages differ in layout, color scheme and topics? [As an alternative, select your own example of a company that has multiple country sites and select three countries plus the U.S. Consider the same question as above.] 24. PROJECT PRESENTATIONS April 24 25. & 26. PROJECT PRESENTATIONS May 1 FINAL PROJECTS DUE 27. SESSION IN LIEU OF FINAL EXAM: PROJECT PRESENTATIONS May 8 FINAL PROJECTS RETURNED   Home | Top