Transforming Consumer Decision Making in E-Commerce: A Case for Compensatory Decision Aids

Transforming Consumer Decision Making in E-Commerce: A Case for Compensatory Decision Aids

Naveen Gudigantala (Texas Tech University, USA), Jaeki Song (Texas Tech University, USA) and Donald R. Jones (Texas Tech University, USA)
DOI: 10.4018/978-1-60566-910-6.ch005
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To facilitate online consumer decision making, a number of e-commerce businesses are augmenting their Web site features. The Web-based decision support for consumers is often provided by eliciting consumer preferences directly or indirectly to generate a set of product recommendations. The software that captures consumer preferences and provides recommendations is called a Web-based decision support system (WebDSS). It is important for WebDSS to support consumers’ decision strategies. These decision strategies could be compensatory or non-compensatory in nature. Based on a synthesis of previous research, the authors argue that compensatory based WebDSS are perceived by consumers to be better than non-compensatory WebDSS in terms of decision quality, satisfaction, effort, and confidence. This chapter presents a study that examined the level of online support provided to the consumers’ execution of compensatory and non-compensatory strategies. The results based on investigating 375 e-commerce websites indicate that moderate levels of support exists for consumers to implement non-compensatory choice strategies, and virtually no support exists for executing multi-attribute based compensatory choice strategies. The results of this study suggest that there is an opportunity in waiting for e-commerce businesses to implement compensatory WebDSS to improve the decision making capabilities of their consumers.
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The last decade has witnessed a substantial growth in both Internet penetration and e-commerce activities. As of 2006, the Internet is used by 73% of all American adults (Pew Internet and American Life, 2006). Similarly, according to a report from Forrester research, sales from e-commerce activities are expected to reach $331 billion by 2010 with online sales expecting to account for 13% of total retail sales in 2010, up from 7% in 2004.1 The growth of e-commerce has resulted in electronic markets offering a wide variety of product choices, elaborate product related information, and great convenience for consumers. Consequently, ever greater numbers of individuals are interacting with online environments to search for product related information and to buy products and services (Xiao & Benbasat, 2007). In fact, searching for product or service related information was the next most popular activity on the Internet in 2003 after email or instant messaging (US Department of Commerce Report, 2004). These statistics suggest that the growth in Internet penetration and e-commerce resulted in increased consumer reliance on the Internet for a variety of decision making processes ranging from searching for products, comparing them, and often resulting in making a final purchase.

Although increased access to information has been a blessing to consumers, the online environment has also resulted in an overabundance of information (Haubl & Murray, 2003). For instance, a search for products on Google shopping reveals that there are more than 3000 options available for a 42 inch LCD television and more than 6000 options available for women’s handbags.2 This amount of information is guaranteed to overwhelm the limited information processing capabilities of human beings (Simon, 1955). Therefore, many web retailers are incorporating web-based decision support systems (WebDSS from here on) to assist consumers with their decision making process (Grenci & Todd, 2002). Web-based decision support systems capture individual user preferences for products either explicitly or implicitly, and provide recommendations based on such preferences (Xiao & Benbasat, 2007). WebDSS have the potential to ease consumers’ information overload and to reduce search complexity in addition to improving their decision quality (Haubl & Trifts, 2000).

Improving consumer decision making in online environments has been the subject of interest for researchers in a number disciplines. Researchers from computer science, library sciences, social psychology, marketing, management, and information systems have been making important contributions to this area of research. Consequently, the array of decision support tools implemented on e-commerce websites is known with different terminology although they all refer to the same tool to be used by the consumers. Examples include intelligent agents, electronic product recommendation agents, recommendation systems, and web-based decision support systems. In their extensive review of electronic recommendation agents, Xiao and Benbasat (2007) categorized recommendation agents (RA) into three types. The first type of recommendation agents includes content-filtering, collaborative-filtering, and hybrid agents. The second type includes feature-based and need-based recommendation agents. Finally, the third type of recommendation agents includes compensatory and non-compensatory based systems.

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Table of Contents
In Lee
Chapter 1
M. Bourlakis, S. Papagiannidis, Helen Fox
Shopping online has emerged as one of the most popular Internet applications, providing a plethora of purchasing opportunities for consumers and... Sample PDF
E-Consumer Behaviour: Past, Present and Future Trajectories of an Evolving Retail Revolution
Chapter 2
Khalid Aldiri, Dave Hobbs, Rami Qahwaji
Consumers’ lack of trust is identified as one of the greatest barriers inhibiting business-to-consumer (B2C) e-commerce. This may be partly... Sample PDF
Putting the Human Back into e-Business: Building Consumer Initial Trust through the Use of Media-Rich Social Cues on e-Commerce Websites
Chapter 3
T. C.E. Cheng, L. C.F. Lai, A. C.L. Yeung
In this study we examine the driving forces of customer loyalty in the broadband market in Hong Kong. We developed and empirically tested a model to... Sample PDF
The Driving Forces of Customer Loyalty: A Study of Internet Service Providers in Hong Kong
Chapter 4
William J. Tastle, Mark J. Wierman
Gathering customer data over the Internet is largely limited to collecting the responses to a set of easily answerable questions, such as Yes/No... Sample PDF
E-Business Decision Making by Agreement
Chapter 5
Naveen Gudigantala, Jaeki Song, Donald R. Jones
To facilitate online consumer decision making, a number of e-commerce businesses are augmenting their Web site features. The Web-based decision... Sample PDF
Transforming Consumer Decision Making in E-Commerce: A Case for Compensatory Decision Aids
Chapter 6
Hannu Verkasalo
Many case examples in the mobile market have shown that the success of mobile services is difficult to predict. Different factors either boost or... Sample PDF
Modeling the Adoption of Mobile Services
Chapter 7
Bill Doolin, Eman Ibrahim Al Haj Ali
The increasing utilization of mobile commerce technologies in e-business raises the question of their use in supply chain integration and... Sample PDF
Mobile Technology Adoption in the Supply Chain
Chapter 8
Jeff Baker, Jaeki Song
The recent growth of business-to-consumer (B2C) Internet auctions challenges researchers to develop empirically-sound explanations of critical... Sample PDF
Exploring Decision Rules for Sellers in Business-to-Consumer (B2C) Internet Auctions
Chapter 9
M. A. Otair, Ezz Hattab
In recent years, there has been an increased interest in the types of online auction. Yet many auctions with fixed-end times are experiencing... Sample PDF
An Implementation of a New Type of Online Auction
Chapter 10
Daniel Friesner, Carl S. Bozman, Matthew Q. McPherson
Internet auctions have gained widespread appeal as an efficient and effective means of buying and selling goods and services. This study examines... Sample PDF
Nibbling, Sniping, and the Role of Uncertainty in Second-Price, Hard-Close Internet Auctions: Empirical Evidence from eBay
Chapter 11
Levent V. Orman
A new generation of intermediaries is predicted to flourish in the emerging electronic markets. They rely on new information technologies such as... Sample PDF
Knowledge-Based Intermediaries
Chapter 12
Zuopeng (Justin) Zhang, Sajjad M. Jasimuddin
This chapter studies different levels of pricing strategies for an online knowledge market, where consumers ask and experts answer questions to make... Sample PDF
Strategy to Regulate Online Knowledge Market: An Analytical Approach to Pricing
Chapter 13
Ruiliang Yan, Amit Bhatnagar
An important strategic issue for managers planning to set up online stores is the choice of product categories to retail. While the “right” product... Sample PDF
Product Choice Strategy for Online Retailers
Chapter 14
Xiaorui Hu, Yuhong Wu
Trust is a major issue in e-markets. It is an even more prominent issue when online shoppers trade with small, less-established e-vendors. Empirical... Sample PDF
Can Web Seals Work Wonders for Small E-Vendors in the Online Trading Environment? A Theoretical Approach
Chapter 15
Blanca Hernández, Julio Jiménez, M.José Martín
The objective of this work is to analyse the importance of firms’ previous experience with different information technologies (Internet, EDI) in... Sample PDF
Analysis of the Relationship Existing between Business Commercial Information Technologies
Chapter 16
M. Adam Mahmood, Leopoldo Gemoets, Laura Lunstrum Hall, Francisco J. López
This research attempts to identify critical e-commerce success factors essential for building business value within e-commerce enabled... Sample PDF
Building Business Value in E-Commerce Enabled Organizations: An Empirical Study
Chapter 17
R. Rajendran, K. Vivekanandan
Businesses invest in developing information systems resources to gain competitive advantages. Literature has demonstrated the requirement of... Sample PDF
Small Business Performance Impacts of Information Systems Strategic Orientation
Chapter 18
Uchenna Cyril Eze
This research discusses Nigerian financial firms’ perspectives on key determinants of e-business deployment. It explores possible differences that... Sample PDF
E-Business and Nigerian Financial Firms Development: A Review of Key Determinants
Chapter 19
Grégory Bressolles, Jacques Nantel
Several measurement scales have been designed by both practitioners and researchers to evaluate perceptions of electronic service Quality. This... Sample PDF
The Measurement of Electronic Service Quality: Improvements and Application
Chapter 20
Minh Q. Huynh, Avinash M. Waikar
In the new era of e-commerce, small businesses have emerged as the driving force because these firms comprise a significant proportion of economic... Sample PDF
Exploratory Study on the Perceived Importance of Various Features of the Internet Service as Influenced by the Perceived Necessity of the Internet and the Size and Type of Small Businesses
Chapter 21
Zakaria Maamar, Djamal Benslimane, Youakim Badr
Today, Web services are of interest to both academia and industry. However, little has so far been accomplished in terms of design and development... Sample PDF
Towards a Contextual and Policy-Driven Method for Service Computing Design and Development
Chapter 22
Mabel T. Kung, Jenny Yi Zhang
Recent years have seen a dramatic increase in business processes and research in distributed computing environments. Applications today can be... Sample PDF
Implementation and Modeling of Enterprise Web Services: A Framework with Strategic Work Flows
Chapter 23
Saravanan Muthaiyah, Larry Kerschberg
This chapter introduces a hybrid ontology mediation approach for deploying Semantic Web Services (SWS) using Multi-agent systems (MAS). The... Sample PDF
Brokering Web Services via a Hybrid Ontology Mediation Approach Using Multi Agent Systems (MAS)
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