Internet shopping, consumer search and product branding
| Published date | 01 February 2000 |
| Pages | 6-20 |
| DOI | https://doi.org/10.1108/10610420010316302 |
| Date | 01 February 2000 |
| Author | Michael R. Ward,Michael J. Lee |
| Subject Matter | Marketing |
Internet shopping, consumer
search and product branding
Michael R. Ward
Assistant Professor, Department of Agricultural and Consumer
Economics, University of Illinois, Urbana-Champaign, Illinois, USA
Michael J. Lee
Graduate Student Department of Economics, University of Illinois,
Urbana-Champaign, Illinois, USA
Keywords Brands, Internet, Consumer behaviour, Shopping
Abstract Recent interest in the Internet as a medium for commerce has raised questions
about the usefulness of branding on the World Wide Web. Examines whether consumers
use brands as sources of information when shopping on the Internet. Applying theory
from the economics of information, predicts that recent adopters of the Internet will be
less proficient at searching for product information and will rely more on brands. As they
gather more experience on the Internet, their search proficiency should rise and their
brand reliance should fall. These hypotheses are tested and confirmed using usage and
opinion survey data from the Internet community. The results suggest that branding can
facilitate consumers' acceptance of electronic commerce.
Introduction
Commerce on the Internet, or e-commerce, has experienced rapid growth
during its infant years. The pace is not expected to slacken. Forrester
Research estimates that online sales in the USA amounted to $7.8 billion in
1998, and forecasts that this form of electronic commerce will reach $108
billion by 2003. While this would still amount to under 5 percent of all retail
sales in 2003, it would represent a dramatic increase in Internet retailing.
Investors seem to believe that the volume of e-commerce will grow
considerably. For example, Amazon.com, a leader in electronic retailing,
now has a market capitalization of $22 billion, greater than either Sear's or
all of America's bookstores put together.
Online shoppers appear to be attracted to the ease with which they can find
products on the Internet, the detailed product information available and the
variety of choices offered. Because of the relative ease of vendors setting up
shop, myriads of smaller retailers have embraced the Internet. However, with
the proliferation of online retailers, sellers are having difficulty
distinguishing their products or services from their competitors', especially
those of unscrupulous fly-by-night companies. Consumers often bypass these
problems by relying on branded products. Ernst & Young recently reported
that 69 percent of those surveyed stated that brand names play a significant
role in their online buying decisions. As a result, marketing through
established brands may be required on the Internet, even though consumers'
cost of information gathering seems quite low.
We investigate the ability of brand names to convey product information to
potential buyers as a substitute for consumer's own information-gathering
activities. It has long been debated whether advertising is used solely to
promote brand loyalty (Dixit and Norman, 1978) and thus tends to be
anticompetitive (Comanor and Wilson, 1974) or if it conveys information
more efficiently than alternative mechanisms (Nelson, 1970, 1974). We find
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Rapid growth
Variety of choices
6 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 1 2000, pp. 6-20, #MCB UNIVERSITY PRESS, 1061-0421
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