Impact of culture on online consumer purchase decision - Thesis Proposal Example

IMPACT OF CULTURE ON ONLINE CONSUMER PURCHASE DECISION & ROLE OF THE RESEARCHER SUMMARY Culture has considerable impact on the consumer psychology and the behavior of the consumer is shaped accordingly. Among the dominant changes in the contemporary world, is the evolution of internet and advent of the e-commerce. This proposal outlines a plan for exploring the impact of culture on the online consumer purchase decision. PROBLEM STATEMENT The advent of the internet in the business has significantly transformed the business. Organizations are making constant efforts to win the customer on multiple channels. Immense literature has been developed to explore the impact of different factors on the consumer purchase decision. The increasing role of the internet has led the researchers to explore the factors that play an effective role in driving consumer to transact online. Culture as a factor has received limited attention. Hence, the problem statement for this proposed study is: Exploration of the role of culture on the whole in affecting the consumer purchase decision while making online transaction. The research questions of this research study are: What are the different factors that determine the culture? What is the impact of culture on the consumer buying behavior? What are the difference in the consumer buying behavior when they are buying products and services online and offline? What type of cultural factors influence the consumer buying decision when they are buying products and services online? AIMS & OBJECTIVES The aim of the study refers to the central idea around which the entire study revolves. With this definition at work, the aim of this study is to determine the impact of culture on the purchase decision of the consumer while making an online transaction. With this aim, following objectives are planned to be achieved: In the light of a specific definition of the culture, identification of a specific set of factors that determine the culture. Exploration of the impact of culture on consumer decision making process. Exploration of the difference in consumer decision making process in online and offline transaction. Exploration of different factors of culture on the online consumer decision making process. RATIONALE/JUSTIFICATION Culture shapes the behavior of the people. The dominant role of culture is acknowledged, and immense studies have been conducted about it (Oyserman & Lee, 2008). Importantly, large number of studies has been developed for arriving on consensus on the definition of the culture. However, many definitions have been has been arrived to date (Birukou et al., 2013). On the other hand, marketers have been involved in the exploring factors that impact consumer decision making process. It is another widely developed but no consensus studied domain as the consumer behavior constantly evolves under different conditions. The role and impact of culture on the consumer decision making process is also explored in cross culture and multi-dimensional factors. For example, Oyserman & Lee (2008) have developed the role of culture on consumers’ information processing, motivation and emotions, decision making, and other factors. While, on the other hand, Hofstede cultural dimensions have attempted to determine the variation in cultures, in different countries, using five dimensions and impact of these factors in consumer behavior is assessed. As a matter of fact, wide literature is present for exploring impact of culture on the consumer decision making process. Additionally, with the advent of the information technology in general and internet based transaction era the consumer decision making process has also evolved. However, as a matter of fact there is limited study related to the impact of culture on consumer decision making process for online purchases due to the infancy stage. Furthermore, different factors of cultures that have been assessed but as individual factors (Kim, Ferrin, & Rao, 2008; Darley, Blankson, & Luethge, 2010). Hence, the underlying proposed study would contribute in the literature about the impact of culture on the consumer purchase decision making process in specific reference to a single definition of culture. BRIEF LITERATURE REVIEW 1. 2. 3. 4. 5. 6. CONSUMER PURCHASE DECISION The consumer decision making has been the core of marketing and business studies since almost more than half a century. The ever changing environment brings about the constant change in the consumer decision making process. This leads marketers to evaluate factors and their changing dimensions, consequently their impact on the consumer decision making process (Richarme, 2001). The importance of the evolution and constantly changing consumer decision making process have been found to have an incremental impact on the business structures and systems on the whole. For instance, from nine box framework and seven S’s framework in 1970s to business system, industry cost curve and the SCP framework in 980s to other models (Court et al., 2009). According to Court et al. (2009), the consumer decision making process has changed from the simple funnel based structure which was as follows: (Court et al., 2009) The constant evolution has transformed the funnel based structure into a more complex, circular structure which is as follows: (Court et al., 2009) This change in consumer decision making process is triggered due to many factors and their respective impact. For instance in the context of electric cars, Chua, Lee, & Sadeque (2010) determined that consumer purchase decision received impact from the set of combination of utilities: (Chua, Lee, & Sadeque, 2010) Similarly, Han, Lerner, & Keltner (2007) have studied the role of feeling on the consumer decision making process and concludes that the combination of emotional and monetary risk assessment based feeling have impact on the consumer decision making process. There is a wide range of factors that affect the consumer decision making process and every individual consumer has different weight assigned to each of these factors. As a consequence, different consumers result in different purchase decision. Importantly single consumer, in different situations, can also result in different purchase decision. The broad categorization of different internal and external factor to affect consumer purchase decision is as follows: (DGHC, n.d.) CULTURE AND IMPACT OF CULTURE Culture is among the most widely studied factors that have influence on the consumer decision making process. The increased attention to the factor of culture lies in the fact that consumer behavior is significantly shaped by the culture (Maheswaran & Shavitt, 2000). There are many definitions of culture. Birukou et al (2013) in a paper has assessed the various definitions of culture and concluded that a defining culture in a definite way is not an endless activity; hence, it is important to support the definition of culture in the respective contexts of use. This idea of the definition of culture is also endorsed in the book of Matsumoto and Juang (2013), who state that culture in Japan have much potential to be interpreted as flower arrangement, while, in Paris the idea term culture bring food, history, art to the mind. According to Matsumoto and Juang (2013) the culture is combination of influence from the following factors: (Matsumoto and Juang, 2013) Ogden, Ogden, & Schau (2004) have studied the role of product type and consumer acculturation (first hand interaction of two different cultures which changes in basic cultural factors) on the consumer purchase decision. The results of the study conclude that purchase decision is less impacted by the marketing tactics when the degree of acculturation is high. It also concludes that understanding of the micro culture and consumer acculturation has much ability to predict the consumer purchase decision. Another dimension of culture that is widely studied is cross culture management. For example, assessment of purchase decision Singaporean and Australian customers was found to have considerable difference on the basis of concern for brand, attraction for innovation and confusion resulting from increased choices (Leo, Bennett, & Härtel, 2005). Impact of culture is also considerably high in the technological adoption in different cultures. Lee, Trimi, & Kim (2013) studied the impact of cultural factors between USA and South Korean customers in technological adoption. The results revealed that innovation in more valued in USA while culture of S. Korea values imitation in technological (Lee, Trimi, & Kim, 2013). Therefore under the influence of different cultural factors, organizations adapt their product and services offering to satisfy the customers in different target markets. Failure to adapt to different cultural factors results in failure of the organization in different cultures. As an example, eBay which is an American based online consumer to consumer internet based organization; Google searched engine; and Amazon failed massively in the China, as a result of ignoring core cultural factors (Wang, 2010; Rein, 2012). Similarly, Wal-Mart’s failure in Germany (Landler and Barbaro, 2006) despite experience in many countries of the world gave good lessons to the businesses that a one size does not fit for all. TREND OF ONLINE PURCHASES Technological development has changed the entire world. One of the most developed dimensions of the technological development is the internet that has transformed the world. As a matter of fact, the shopping on a physical store has its own experience; however, the level of convenience offered by online shopping has become most convenient and the efficient (Nielsen, 2010). The Nielsen Report published in the year 2010 shows the online purchase pattern varies for different products. For instance, given below is the average of products and services that customer preferred to buy online globally: (Nielsen, 2010) According to the similar report of Nielsen (2010), the customers in different parts of the world spend different percentages of income on online shopping which is as follows: (Nielsen, 2010) Where AP is Asia Pacific, EU is Europe, LA Latin America, MEAP is Middle East, Africa, Pakistan and NA is North America. The classification of regions of different parts of the world reflects the overall proximity in the buying patterns. Data collection of shopping trend from PWC developed following trends: (PWC, 2014a) The above statistics reveal that a considerable market across the globe still does not do online shopping. Also, the some of the findings revealed from the above survey outlined the preference of the customers for different factors that convince customers for online purchases. For example, protection against the online crime, security of the personal information and personalized offering are given highest importance. Furthermore, the customer value multichannel shopping and online social media engagement with the companies to be attracted toward the online shopping (PWC, 2014b). Kim, Ferrin, & Rao (2008) stated that the trust and perceived risk impact significantly to the online consumer purchase decision. Additionally, a similar study reveals customer also value reputation, privacy and security concerns and quality of information on the website have a strong influence on the consumer purchase decision in online purchases. IMPACT OF CULTURE ON ONLINE CONSUMER PURCHASE DECISION According to Gefen & Heart, (2006), trust and beliefs that have considerable impact on the e-commerce is largely dependent on the local or the national culture. The study states that predictability and similarity in trust beliefs vary across culture and shall be concerned in the respective environment for understanding its impact on e-commerce. Bajaj and Leonard (2004) have also endorsed the idea of understanding the national culture for driving commerce. The study proposed the three dimensional model with the culture as a guiding principle along with the policy and information technology for impacting growth of e-commerce. Moreover, the study used factors of trust, pattern of communication and corruption as the factor of the culture (Bajaj and Leonard, 2004). An important dimension identified in the study of the Bajaj and Leonard (2004) is the fact that each factor of culture (as used in the study) has different impact on business to business, business to customer and customer to customer online transaction. Lee (2000) in a study states that the cultures where face to face interaction is given greater priority, such culture in return creates barriers for the internet based transaction. Javenpaa and Tractinsky, (1999) in a study established across countries the level of perceived risk also varies and this variation is shaped and affected by difference in cultures. The paper also states that risk perception has a negative relation with the adoption of online shopping. Choi and Lee (2003) in a comparative study of cross culture of USA and Korea with respect to the online purchase decision and concluded that risk perception with the online transaction in two countries varies considerably. As a result of risk perception, the demands from the online service provider also vary considerably. The study of Pavlou & Chai (2002) entails that the attitude has significant relation with transaction in the culture of collectivist nature such as China while it is insignificant for the culture of the individualistic nature such as USA. The study of Darban and Li (2012) concluded that internet based transactions mainly powered by the social media (Facebook) enables the customer to learn the mindset of the company which increases consumers loyalty with the company. Hence, different cultural factors have been found to have an impact on the consumer purchase decision in making online transaction. Most importantly, culture was the main factor that resulted in the loss of international online businesses in China to local competitors. RESEARCH METHODS The systematic research methodology will be used for the development of a comprehensive research results. The research strategy proposed for the underlying study is based on the survey. A survey is a method of collecting information about the phenomenon from the concerned subjects (all or representative) (Saunders, Thornhill, & Lewis, 2009). The research design planned for this study is one-off where survey will collect the information for the developed theoretical model. Importance of data collection methods needs no assertion. Systematic collection of the data is critically important for the developed to representative results. The underlying study proposes to use the primary and secondary sources of data collection. The primary source is the first hand information collected from the concerned subjects for the first time. The study plans to employee questionnaire for the collection of the primary data for the survey. The questionnaire is well planned and structured set of enquiries presented to the concerned subject for responses. On the basis of the conceptual model that will be developed in the methodology chapter, the questionnaire will be designed. Alongside, the study will also use the secondary data. The secondary data will be collected for the development of the literature review. The literature review will contribute in the development of the conceptual model as well as analysis of the results. METHODS OF ANALYSIS Analysis of the data collected is one of the most important parts of the study. Research methodology provides guideline for the systematic assessment of the data collected for the study. The empirical information collected in the form of the questionnaire will provide quantitative data for assessment. The proposed method of analysis for this dissertation is the statistical techniques of descriptive analysis. Additionally, the study will also provide the graphical presentation of the analyzed data. The study will also develop the analysis of the data collected in reference to information developed in the literature review. Hence, the reference from the literature review will be based on the quantitative method of analyzing the collected information. ETHICAL CONSIDERATIONS The value of the research is considerably added on the basis of attention given to the ethical considerations in the entire research activity. The importance of the ethical considerations remains in the fact that research results are able to effectively contribute in the literatures and have practical implications. As the proposed study plans to the use the primary data, following measures are planned to the taken for the ethical conduct: The participants of the study will be clearly informed about the topic and objective of the research study. The participants will also be given the written undertaken that provided information will not be used for any other purpose than stated one. The participants will be required to give written consent that information provided is true and is not intended to deviate the research from stated objective. As the study will also be using secondary resources for the development of the literature review, therefore, quality of resources will be maintained by including authentic resources. TIMESCALE/PLAN Following time scale is proposed for the dissertation: Components of dissertation 1st Week 2nd Week 3rd Week 4th Week 5th Week 6th Week 7th Week 8th Week 9th Week 1. Research question preparation for the stated aim and objectives of dissertation                 2. Literature review preparation (collection and chapter development)                 3. Development of conceptual framework in alignment to research question in reference from literature review                 4. Preparation of plan of methodology for study                 5. Recruitment of participants 6. Questionnaire development                 7. Filling of questionnaire from participants                 8. Results compilation and analysis                 9. Writing of introduction and methodology chapter                 10. Completion of the first draft of the dissertation                 11. Discuss with supervisor                 12. Recommendation inclusion and submission                 RESOURCES/COSTS The schedule has been defined, in order to ensure that the project is completed within a defined time resource. Also, due to the limited cost resources, the proposed study plans to circulate the questionnaire online. List of References Bajaj, A., & Leonard, L. N. (2004). The CPT framework: understanding the roles of culture, policy and technology in promoting ecommerce readiness. Problems and Perspectives in Management, vol. 3, pp. 242-252. Birukou, A., Blanzieri, E., Giorgini, P., & Giunchiglia, F. (2013). A Formal Definition of Culture. Models for Intercultural Collaboration and Negotiation, vol. 6, pp. 1. 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Available from http://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/ [Accessed 27 February 2014] Read More