Web-based Sales: Defining the Cognitive Buyer

This paper explores the forces contributing to the transformation of buyer behavior when buyers use the World Wide Web for making purchase decisions. These forces include trends in the marketplace, where products are becoming more complex and plentiful, as well as the emergence of Web-based marketing and functions. The interactive nature of electronic sales, like Web-based marketing, makes this type of sales significantly different from its traditional counterparts. Sales on the Web shape buyers' perceptions about products, the decision making process, and the marketplace, resulting in buyer behavior this paper defines as the Cognitive Buyer. Technical developments like secured transactions and improved access methods like catalog content menus will address buyers' uncertainties and provide marketers with a better understanding of their buyers. As this new sales channel develops it will create a demand for itself by using knowledge systems to organize information. "Focusing on mere information has led to overload ... rather than the search for meaningful new patterns of knowledge" Hazel Henderson OVERVIEW Buyer enthusiasm for direct sales on the World Wide Web lags far behind industry expectations and the questions being raised all seem to miss a larger transformation taking place. The combination of changes in the marketplace and the distinctive nature of the electronic sales channel all contribute to the emergence of a new and distinctive buyer behavior that this paper identifies as the Cognitive Buyer. The Cognitive Buyer relies heavily on rational problem solving and abstract reasoning and differs from traditional buyer behavior by intentionally engaging technology in the decision-making process. This paper explores how this technology is shaping buyer behavior in order to understand why sales on the Web have been so disappointing. Technology is employed in all aspects of product development and marketing, and most recently in attempts to automate sales. Bloch, Pigneur, and Segev (1996) present a fundamental business rationale for using electronic commerce derived from its potential capabilities to improve, transform, or refine current products, process or business models. Hoffman, Novak, and Chatterjee (1996) identify six different commercial opportunities on the Web by function, including the online store or electronic product catalog, the primary focus of this paper. Sales applications on the Web have evolved in a very short time and progressed through easily identified stages of development. First, there were flat product brochures. Next, came the current offering of interactive electronic catalogs that enable buyers to search databases of products to find what they need. Yet, only a handful of success stories exist and, most recently, IBM closed its electronic mall, and Nets Inc. in Cambridge, Massachusetts declared bankruptcy. Cronin (1997) argues that the demand for online sales on the Web can only come from customers, competitors, or universally accepted distribution channels. Paul Zellweger ([email protected]) works for ArborWay Electronic Publishing Inc. a t Cambrigde, Massachusens. The author wishes to thank Linda Jacobson, Senior Associate at Mercer Management Consulting in Lexington, Massachusetts for her suggestions and comments. TRANSFORMATIONS IN THE MARKETPLACE AND IN MARKETING To understand the influences affecting buyer behavior on the Web one only has to direct his or her attention to two major changes occurring in the marketplace. First, technology has dramatically reduced the amount of time it takes to develop a new product and bring it to market. This has set off increased competition and produced an extraordinary array of product choices in both the consumer and business markets. Aggressive product marketing and rapid innovation make these markets very dynamic and fastpaced. Second, the increased use of computer technology in the products themselves has expanded product capabilities and made products more feature-rich and complex. The overwhelming amount of detailed product information is thrust directly on the buyer and forces buyers to take a more deliberate and studied approach when making a purchase. Traditional marketing and media channels also are feeling the impact of changes in the marketplace and are losing their effectiveness to reach individual consumers. Rayport and Sivoka (1995) describe this market condition in more basic terms as an "overcapacity, in which demand, not supply is scarce". The Web is a logical alternative to traditional marketing because it is technically capable of addressing these issues, including the mounting flow of detailed information and reaching out to individuals. However, aspects of its interactive capabilities are not fully utilized and customers are, for the most part, anonymous and freely able to move from one site to another. Overall, Web marketing has yet to identify issues related to creating demand, other than aspects of personalization where promotional materials respond directly to individual buyer's interests. Hoffman and Novak (1996) argue that marketing on the Web represents a radical departure from the traditional marketing. Traditional mass marketing chanD o w n l o a d e d B y : [ S c h m e l i c h , V o l k e r ] A t : 1 1 : 0 3 1 1 M a r c h 2 0 1 0