Abstract
As each year sees an increase in the number of Internet users, so too the percentage of purchases made online increases. It is for this reason that firms are showing a growing interest in designing effective communication strategies that help to achieve their online business objectives. Online sales promotion is one of the most widely used communication tools on the Internet. However, there is little research into its effect on purchase intention and how this effect may vary depending on the type of incentive offered and the consumer’s level of experience in using the Internet. This chapter seeks to analyze which types of online sales promotions (utilitarian vs. hedonic) are most effective at triggering online purchasing and whether the user’s past experience of the Internet is capable of moderating the effect of the type of incentive on online purchasing.
Top1. Introduction
The Internet constitutes something of a revolution, both for its users and for firms. The resources it offers individuals and organizations facilitate communication and foster commercialization between people and entities. Each year witnesses growth in the numbers of individuals and firms adopting the medium. Over 2,044 million people world-wide now use the Internet, or 29.7% of the world’s population (ONTSI, 2011). For firms in the European Union (EU), online commerce represents 14% of their billing. Over 40% of the EU’s population uses the Internet to acquire products and services, representing a 3% increase on 2010, and 20% on 2004 levels (Eurostat, 2011). This growth is also reflected in the $689,635 million generated by e-commerce (JP Morgan, 2011).
This scenario explains the extensive interest amongst researchers and the volume of research projects focusing on the Internet that are currently emerging.
The Internet is being used for increasingly complex and sophisticated purposes, having evolved from being almost exclusively used as a messaging system (email), to now being used for keeping up to date with current affairs, instant messaging, social networks, videos, gaming, or as a shopping channel – to name but a few. In short, the Internet is used, above all, as an information source, a direct and instantaneous communication medium, and a shopping channel.
Figure 1 outlines the evolving percentage of individual users world-wide, by the type of activity they carry out online. In general terms, social networks are expanding in their reach and in fact represent one of the most rapidly growing online activities in terms of volumes of users.
Figure 1. Worldwide evolution of active use of the internet by activity undertaken. Sample: Active internet users (going online daily or every other day). Source: “The Socialisation of Brands: Social Media Tracker Wave 5,” Universal McCann (2010)
Amongst the many activities that can be carried out over the Internet is the acquisition of products and services. In 2010, 40% of EU Internet users made some sort of purchase online (European Parliament, 2011). These data reveal that there is still a long way to go in terms of increasing confidence levels around electronic commerce and fostering online purchasing.
It would seem undeniable that the Internet is now a part of our everyday lives and that the benefits it brings to each user are increasingly regarded as essential. It also appears inevitable that people, regardless of who they are, what they do for a living or what age they are, will have some kind of contact with the Web. Yet the importance of this medium in our everyday activities is not only based on the use we put it to, but also, as alluded-to earlier, on the major income source it represents for firms operating online.
This, then, gives rise to two key questions:
From a marketing perspective, the Internet enables communication campaigns to be created and aimed at very specific market segments, as well as delivering benefits related to information and interactivity:
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Information: The Internet gives consumers access to a vast quantity of information with just one click. Thanks to its flexibility in terms of content, available space, time, and so on, it also enables information to be permanently updated. According to Brackett and Carr (2001), when a Website is regarded as an information source, attitudes towards that site are positive.
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Interactivity: This refers to the degree of involvement experienced by the Internet user. The Internet’s capacity to enable the user to interact with the online source means that the user is employing a greater number of cognitive resources to process the information they are receiving (Ariely, 2000). For this reason, the degree of involvement will be much greater than that experienced with other, non-interactive, media.
Key Terms in this Chapter
Utilitarian Benefits: All those benefits derived from the utility of a product. Principally they refer to saving, quality, and convenience, as these help the consumer to increase the utility of the acquisition derived from the purchase and the efficiency of the purchasing experience ( Chandon, Wansink, & Laurent, 2000 ).
Hedonic Benefits: All those benefits derived from the use and enjoyment of the product. Principally they refer to entertainment, exploration, and expression of value, given that these provide pleasure, emotions and self-esteem ( Chandon, Wansink, & Laurent, 2000 ).
Monetary Sales Promotions: These promotions offer a monetary stimulus and are capable of capturing the attention of the individual as they represent a cost saving, because they deliver either a price discount or an additional quantity of the product. This type of tool typically aims to fulfill short-term objectives, such as increasing the sales volume of the product, incentivizing re-purchase, and/or triggering a change of brands.
Click-Through Ratio: This ratio measures the percentage of clicks made on an online banner or advertisement, compared to the total number of individuals who have received it.
Online Sales Promotion: A combination of communication instruments designed to communicate (to an individual or entity) the addition of some kind of bonus to the product during a defined timescale, as a means of achieving certain pre-planned communication objectives.
Non-Monetary Sales Promotions: These promotions offer a non-monetary stimulus and they attract the individual’s attention because of the additional benefit they provide, above and beyond the product itself. This may be in the form of a tangible or intangible gift, presented immediately or following some time after the purchase, or via a competition. This type of tool typically aims to fulfill objectives such as generating brand image and awareness, retaining customers, generating Web traffic, and facilitating the capturing of information about the target public.
Web Experience: The skill of carrying out activities related to products, such as information-search, interacting with sellers, decision-making, purchasing products, and, ultimately, using the product ( Sicilia, Ruiz, & Munuera, 2005 ).