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The Effect of Demographic Factors on Online Purchase Intention

The Effect of Demographic Factors on Online Purchase Intention

Brief Introduction

Demographics have long been recognized as important factors in case of doing the market segmentation and targeting specific customers. This concept is called identifying target. Without having a crystal clear approach to who the consumers would be and how the business is going to serve consumers, lunching a product will be unsuccessful and there would be no return on investment. Recognizing the demographics enable and facilitate further studies in terms of positioning the product, how to serve customers, how to meet their needs and wants, how to at least meet the minimum levels of satisfaction, how to maintain customer relationship management and how to perform value creating activities to sustain in the market and to retain the existing customers rather than obtaining the customers which very costly.

Background of the study

Interest

Describing the effects of demographics of customers on online purchase intention

Objective of Study

  • The study points out and clarifies to what extent different demographics affect online purchase intentions of consumers.
  • Which issues should be taken into consideration and generally more focused to attract the maximum number of customers for the online business, with respect to the existing hypercompetition regarding 4 different types of products (convenience, shopping, specialty, and unsought goods).

Significance of Study

Demographics should be essential elements of the marketing. Regarding to the fact that in today’s business it is extremely important for any organization to find out its target market characteristics to which it wants to dedicate its products or services. The consumer’s attitude is directly affects the outcome of the business. Demographic information also helps the business owners to target their product in the right time and at the right place.

The main concern of this research is to find out how online purchase intention is affected by the demographic factors. Moreover, the purpose of this survey is to examine which factor is more effectual in the customer online purchase intention.

Literature Review

As the times goes by the importance of online purchase intention becomes vital to companies. Sales teams are always trying to use different strategies in order to persuade customers to buy and increase their online purchase intention. Needless to say, sustainability and profitability of firms are directly related to increase in number of purchases. Hence firms try to consider all aspects in order to be more efficient in the market and increase their market share. In this case companies mainly try to conduct survey in order to understand the important factors affecting the online purchase intention. One of the most determining factors affecting online purchase intention is consumers themselves. Before planning, designing and lunching a product or planning a service it is necessary to consider who the targeted customers are and what their needs and wants are. It is essential to find out what kind of customers will consume a particular product or service and to what extent demographic factors may alter their decisions.

In this case, analyst tried to use segment marketing. They used different strategies to differentiate customers and categorize them accordingly. In segment marketing consumers will be mainly categorized based on their similarities in terms of their needs and wants. By clarifying the consumers all strategies and value creating activities can perform effectively. It helps firms to better communicate with consumers, better understand their perceptions, provide appropriate design and service according to consumer’s perception and tastes as well as price determination.

In case of market segmentation demographics consideration becomes essential. Demographics are classified in groups which are:

  • Age,
  • Gender,
  • Family members (Optional),
  • Education,
  • Religion,
  • Profession,
  • Ethnicity and alike.

The reason why demographics are significant when doing analysis is that consumer behavior can be predicted easier and measurements would be facilitated.

The most important fact in here is that millions of users are available online, but how we recognize Internet users from non users can be the appropriate question. This issue happens by classification of socio-demographic factors like age and income level and alike.

It is worth mentioning that consumer’s characteristics also play a significant role regarding what have been mentioned above which can be classified into variables like demographic and psychographic. Psychographic variables are more in terms of mental processes which are very important when interacting with customers.

Factor of Age:

It is highly significant to notice that the consumers’ tastes changes consequently regarding their ages. As their ages increases, needs and wants and their concept toward products or services vary. As an example, particular person may select stylish product when younger but as his or her age increases other factors like durability, quality and specifications may become more vital and his or her concept toward specific product or service would be changed. This issue might have an impact on online purchase intention of consumers. On the other, the older the customer is, his or her tendency to perform the online purchasing decreases. It could be explained by the factors of trust, convenience and so on.

Considering age, analysis reveals the fact that age has an impact on internet usage. Generally speaking, young people are more willing to use internet comparing to old ones. Because old group of consumers are more concerned with security which generates trust and eliminates vagueness and threats felt when being online. Moreover, the knowledge of computer and internet usage is another significant factor in this case. It is crystal clear that as the age increases, decision in terms of purchase intention would be greater.

Factor of Gender:

Also in terms of gender, by classifying people into male and female, women are more likely to perform online transactions related to shopping activities. However Roehl (2001) showed that gender does not have great impact on purchasing behavior; however it plays a significant role in terms of internet usage. This can be concluded that regarding the fact that more number of women who are using internet probably perform more online transaction, but not necessarily.

Gender can help companies to differentiate their customers into two groups to serve them better. For example, In case of beauty products, all merchants can be classified based on gender. Even in shopping centers products are divided based on gender. This helps companies to distinguish the specifications of products and to better serve targeted customers later on. Not only that but also it would be more convenient for customers.

Factor of Income Level:

The second concept, income level, is also important to be noticed since although needs and wants are important issues to motivate individuals to buy particular product, there might not be any demand. This issue happens when they cannot afford to buy regardless of the fact that they would love to have it. Those products that are charged by premium price cannot be bought by all people. Therefore, income level of consumers is vital to see whether they can purchase what has been offered to them or not.

Classification of customers based on income reveals the fact that what differences in income level exists. How possible it is to categorize people based on their income. Categorization helps companies to elicit the fact that which group is more populated (based in income). And in terms of lunching products what pricing strategy should be considered.

Not only that but also some businesses first analyze markets (specially heavy investors in retail sections) to see based on level of income what type of product with what sort of quality can be offered to public. The highlighting fact is that the more the income, alteration in time value of money differs.

Factor of Educational Level:

Level of education also might have great impact on online purchase intention. Younger generation is more educated nowadays because many education centers exist these days comparing to decades ago and their target segmentation is based on those who are willing to study. According to several studies, younger generations use internet more, so high usage leads to gain knowledge about e-Commerce websites and alike and increases the chance of performing online transaction. Most of students and those who have achieved degrees have had at least one subject elaborating the impact of computers and internet on their field of study. To simply put, they understand that regarding the existing nature of hypercompetition and volatility of market and intense rivalry among competitors more people will use online purchases ( as a result of more advertises, more encouragement, more convenient methods of payments over internet, highly secured systems using SSL, HTTPS).

Factor of Profession:

Depending on the nature of job people’s intention to use internet differs. According to the current business’s objectives and their corporate and business level strategies, they go online to reduce reveal costs as a result employees who work for companies must have the required knowledge performing online tasks. To exemplify: e-CRM, e-Marketing, internet selling, online advertising, online payments, online consultations, e-Products.

While using internet to perform tasks and daily routines individuals will use internet more and more and they get use to it. When feeling secured, trust ability increases and that’s how a person how is working in online job relate activities may use more of internet.

It is predicted that regarding global reach, and intense rivalry more business go online and more e-Commerce websites establishes. Consequently more time will be needed to be online.

Factors of Religion, Ethnicity and Culture:

Cultural differences also alter the pattern of purchasing behavior. It has been experienced that region by region, culture differs and mixture of advertisements with traditions and customs become prominent issue.

Regarding different religion and concepts toward certain types of products, target market differs. It is highly important to consider ethical norms and beliefs when penetrating into a market, otherwise business will not be successful and the chances of being sustained in the market drastically drops down.

That’s why when going global, many companies prefer to go for JV, M&A, or even partnership (to get the relevant information and use the advantage of existing partner in the same market).

Conclusion:

Based on the above elaborated issues of describing the effects demographics on online purchase intention, it can be realized that consideration of categorization based on demographics is inevitable for many business and any negligence in this case may impose detrimental impact on the profitability of firms. Before, while and after lunching products, the mentioned factors should be considered to see:

  • How demographic factors alters the buying pattern of consumers,
  • How demographic factors facilitates segments marketing,
  • How demographic factors helps to lay the foundation of business plan, marketing plan,
  • How to make business plan and marketing plan appropriate to customer’s perception, and how to revise and keep them updated,
  • How to manage sales team to better communicate with customers,
  • How to implement the concept of e-CRM,

References

1. Roehl, W. (2001). Browsing, searching, and purchasing travel products on-line, In, Moisey, N, Nickerson, N. and Andreck K.L. (eds.), 32nd Annual TTRA Conference Proceedings, Fort Myers, USA

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