Factors Affecting Impulse Purchasing in Online Food Delivery (pdf)
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Factors Affecting Impulse Purchasing in Online Food Delivery among Gen Y in Malaysia1.0 Introduction1.1 Background of researchOver the few years, an advancement in technology has driven the world into the digital era causing consumer have a new option of shopping which is an online shopping. Many large and small businesses utilize internet technology to boost their sales and reduce costs. Gradually, the percentage of online shoppers in Malaysia has been increased over time. The recent survey by Malaysian Communications and Multimedia Commission showed that people at the age range of 20’s and 30’s were the highest number of internet user while the percentage of online shoppers among internet users raised to 53.3% in 2018. Thus, these evidences support the belief that Generation Y is an essential group of people who contributes to the growth of e-commerce market in Malaysia by online purchase (San,et al., 2015).Since the change in consumer lifestyles have shifted to be more time-saving and convenience-oriented for meal occasions, Malaysians tend to have less energy and time to prepare meals at home (Agriculture and Agri-Food Canada, 2014). In order to satisfy thementioned lifestyles, especially in busy individuals, an online food ordering service has become popular. It is offering more choices and convenience by allowing customers to order fromvarious restaurants via internet platforms (Hirschberg, Rajko, Schumacher & Wrulich, 2016). In other word, one of the product Generation Y mostly purchase is food (Valentine & Power, 2013).However, during the purchasing decision process, consumers may engage an impulsivestate. According to Khawaja (2018), an impulse purchase illustrates an unplanned and immediatepurchase. It happens when consumers experience a sudden but powerful stimulation to purchase product offers immediately (Aruna & Santhi, 2015). Apparently, Gen Y are oversending andindulge in impulse purchasing. UOB Malaysia managing director and country head of personalfinancial services Ronnie Lim said millennials’ spending habits would dictate and shape the consumer market as they would soon make up the largest consumer demographic.There are various potential factors influencing impulse purchase behavior. Firstly, Gen Yare likely to rely on the opinion from their friends and electronic word or mouth when they are making a decision to buy a particular product (Valentine & Power, 2013). Secondly, a marketingtool as an online adverting can be used to establish and maintain interaction with consumers. Nevertheless, online advertising is not the only way to communicate with consumers. Another communication channel is website. It has been suggested in many studies that website design should be concerned seriously in order to enhance impulse purchasing behavior in online stores (Chen, Yeh & Lo, 2017). Lastly, many customers are triggered by a good deal due to economic reason and perceive of value.Therefore, this research attempts to examine these factors that could stimulate impulse purchasing behavior in online ordering food among Generation Y in Malaysia.
1.2 Problem statementsIn these past few years, there have been many news report that Malaysian Millennials experiencing financial problem as debt caused by impulse purchasing behavior. According to Asian Institute of Finance (AIF), most of Gen Y-respondents engaged high-cost borrowing, with47% of them taking expensive credit card borrowing and 38% relying on personal loans. This survey showed that the majority of Malaysian Gen Y experience overspending from impulse purchases. As a result, they are warned to be conscious on the danger of impulse purchases which could be triggered by manipulative marketing practices (Surendra, 2017).Meanwhile, the internet also allows consumers to find information about the products easily. These information can discourage their impulse purchases. For instance, the internet allows consumers to compare the prices, products and reviews with the competitor easily. Moreover, there are many consumers refuse to shop online as they only see the image of the products. Retail Dive (2017) contributed that the most reason why consumers choose physical store over online store is the ability to touch, see and feel the actual products. Therefore, they can control their impulsive purchasing behavior better causing them to delay their purchasing decision (Moe and Fader, 2004).On the other hand, online food delivery service is rising and eating at restaurant is nolonger an occasion for the Gen Y’s. This is mainly due to the popularity of food delivery apps.Millennial professionals like to work harder and relax harder as well. Since lifestyle changes,prompt and convenient solutions like online food delivery becoming both necessary andaffordable.According to a report by the NPD group (2017), 1.7 billion food service visitsrepresented by the delivery in 2017 while millennia’s are the heavy users. The report made acomparison that 29% of delivery orders made by millennia’s within a week while less than 50%of boomers and older use delivery services not more than once in 2 months. This higherpercentage is a main reason for doing this research on Generation Y. Generation Y is alsoestimated to have higher purchasing power compared to their parents ever had.According to Deloitte (2018), convenience plays an important role for millennials in theirfrantic lifestyle. Online shopping and online food delivery seen a growth due to the factor lack oftime. Food delivery services play an important role in the Gen Y lifestyle as they remove thetime barrier and guarantee to deliver the food at specific time. However, this also influencesthem to overspend on food delivery. Hence, there is a need for this research to find out thefactors that influence the millennials to impulse purchase on online food delivery.1.3 Research gapMost of the researches did not focus on a specific product. There is few researches about impulse purchase in online food ordering especially in Millennials. Instead of it, many studies highlighted the focused products such as fast food, apparel and luxury goods. Another major gapis factors being tested. They likely to focus on possible factors affect impulse purchase in
physical store or socio-demographic. Meanwhile, some variables have not been mentioned oftenin many paper such as review from customers and online advertising. Lastly, there are few gapshave been found under methodology part in the past researches. Although the chosen factors inthis study have been done in the previous study, the researchers used qualitative method.1.4 Rationale of researchIn this competitive market, a traditional way of running business might not be enough tosurvive in this digital era. In order to adjust into a current situation, the marketers need to focus on a new potential target market as Gen Y. It is crucial for foodservice businesses to understandthe online purchasing patterns of millennials to improve their current marketing strategy. If the foodservice providers obtain a better understanding of the determinants that urge online impulsepurchasing behavior, it would be a great opportunity for the businesses to enhance their sales performance and attract more customers. Therefore, this research attempts to provide useful information that help the marketers create a marketing campaign successfully.1.5 Research objectives1.To examine the relationship between reviews from customers and impulsepurchases in online food delivery among Gen Y.2.To determine the effective online advertising towards impulse purchases in onlinefood delivery among Gen Y.3.To analyze the effect of sales promotions towards impulse purchase in online fooddelivery among Gen Y.4.To identify the impact of website design on impulse purchases in online fooddelivery among Gen Y.1.6 Research questionsQ1: Does social influence affect impulse purchase of Gen Y?Q2: What online advertising practices affect impulse purchase of Gen Y?Q3: What sales promotions enhance impulse purchase of Gen Y?Q4: Will website designs influence impulse purchase of Gen Y?1.7 Benefit of the researchBesides, the information would be beneficial for other business industries if the information is adapted properly. Furthermore, the marketers will be able to design and strengthena right marketing campaign which is able to enhance impulse purchasing behavior effectively. As a result, their marketing strategies will become a competitive advantage over their competitors.
CHAPTER 2: LITERATURE REVIEWS2.1 Review from customers (200 words)According to Cheng and Ho (2015), online reviews from customers are part of social influence. Social influence promote impulse purchasing behavior (Moser, Schoenebeck & Resnick, 2019). It can be defined as “the processes whereby people directly or indirectly influence the thoughts, feelings and actions of others” (Turner, 1991). Social influence is aboutsharing information with others and not necessarily happens only in face-to-face interactions (Trusov et al., 2010). Marston (2010) stated in his book that Millennials are peer-oriented andthey tend to rely on others’ opinion in decision making.In the Gen Y’s time, it has broadened due to the social media networks (Kwahk & Ge, 2012). Millennials do not only use Social Media to stay connected with their friends and family, but also to find information about products, services, promotions, and sales foodservices offering to them (George, 2011). Although social media serves as rich source of information, it highly impacts on consumer decision making from the information and opinions retrieved from the connections (Power & PhilipsWrens, 2011). Likewise, online ratings have become another most trustful source to customers as a personal recommendation when they are taking purchasing decision (BrightLocal 2014). Kim, et al. (2017), explained that these forms online customer reviews are Electronic Word of Mouth (eWoM) which influences customers’ purchasing decision.eWoMhttps://www.sciencedirect.com/science/article/abs/pii/S0148296314004007https://www.researchgate.net/publication/306526906_The_Effect_of_Online_Customer_Reviews'_Cha racteristics_on_Saleshttps://www.brightlocal.com/wp-content/uploads/2014/07/Local-Consumer-Review-Survey-20141.pdfhttps://www.researchgate.net/publication/309855994_The_Impact_of_Electronic_Word-of-Mouth_on_Online_Impulse_Buying_Behavior_The_Moderating_role_of_Big_5_Personality_Traitshttps://www.researchgate.net/publication/306526906_The_Effect_of_Online_Customer_Reviews'_Cha racteristics_on_Sales2.2 Online advertisingAdvertising plays an important role in encouraging impulse purchases in online shopping(Mendenhall, 2015). Marketers use advertising as a communication tool to convey information
and encourage an audience to make a purchasing decision of product or service (Ryans, 1996).The product information, its benefits and brand name of products can be known to customersthrough the advertisement (Ingavale, 2013). In many case at the purchase time, the customer buy
products due to advertisement recall (Khalid, 2016) According to a study by Joshi (2012), peopleprefer online advertisement as a good promotional tool for knowing about the local brands andglobal brands as well. According to Marston (2011), Millennials are more technology savvy andinterest in Social Media rather than Baby Bloomer. Thus, this tremendous rise of internet hasalso advanced the advertisement to another level Deloitte, 2015).Online advertising has its own strengths as it offers different forms of advertisement suchas text, photo, audio & video and multimedia effects (Khong, 2010). These new variety ofcontents have also bridge the relationship gap between advertisers and target audiences, fromtraditional form of one way communication to interactive communication (Tang and Chang,2017). The research done by Pawar (2014) showed that although online advertising includes allthe features available in offline advertising, it gives more advantage compared to offlineadvertising due to the high level of scope and its global reach through internet. Some examplesof online advertising such as social media ads, banner ads, email newsletters, hunt engine resultspages, pop-ups, contextual ads and spyware (Suryawanshi and Khandare, 2016).Besides, Anusha (2016) explained that online provides the option of even late chanceswhile the ad campaign is going on, but also customization feature that can be done in online adcampaigns and it is cheaper than print advertising. Online ad campaigns mostly include banneradvertisements which are smaller boxes of ads which can be seen in many web sites. Such adscan create product awareness and can bring traffic to the business website. The online advertisershave easy control over the target market with banner ads such as demographic targeting,geographical targeting, behavioral targeting and site based targeting. These are the usual waysthat online advertisers can pick their target which is a major win for them.Furthermore, online advertising offers topical and recent information and even newsabout the business through interactive and colorful catalogue (Tavor, 2011). According to astudy by Sakarya and Soyer (2013), there are cultural differences in online shopping behaviors ofconsumers between utilitarian and hedonic online shoppers while they also share similarconsumption values.https://www.researchgate.net/publication/261031147_Impact_of_Advertisements_on_Purchase_Decision_of_Youth_with_reference_to_Consumer_Goods2.3 Sales promotionsAccording to Balaghar et al., (2012), Sales promotion is the most ideal tool next toadvertising. Totten & Block (1994) explained that sales promotions refers to many type of salestechniques and incentives that generates quick or short term effects in Sales. Lehman and Winer(2002) and Walsh (2000), argues that sales promotions are related to special offers which isfocused on creating demand at the given period in which they are fixed. According to Balagharetal., (2012), Sales promotion is the most ideal tool next to advertising. Blattberg et al., (1981)argued that sales promotion boost the acceleration of purchases in terms of quantity bought.
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