Dissertation Proposal: Consumer Behavior & Online Shopping Impact

This dissertation proposal examines the evolving landscape of consumer behavior, specifically focusing on the differences between traditional and online shopping experiences and their respective impacts. The study delves into the motivations behind consumer preferences, exploring factors such as convenience, product information, time considerations, and the influence of cultural, social, personal, and psychological factors. It contrasts the tangible aspects of traditional shopping with the virtual environment of online retail, analyzing how these differences affect purchasing decisions. Furthermore, the research investigates the influence of online shopping on the national economy, considering its contribution to GDP and potential growth. The proposal includes a literature review that defines key terms and summarizes relevant research, followed by the formulation of research questions and hypotheses. Finally, it outlines the methodologies to be used, including the limitations and ethical considerations that will be addressed during the study. This research aims to provide insights into the consumer behaviour shifts in the digital age and its economic impact.

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Dissertation Proposal on
Consumer behaviour difference between traditional and online
shopping and the impact of online shopping on national
economy

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Table of content

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Abstract
Dissertation Title- Consumer behavioural difference in traditional and online shopping and the
impact of online shopping in national economy.
Online shopping is getting popular day by day and it is becoming a part of our life style. The
development of technology and communication network has influenced marketing to a large
extend. With the increase in competition and rising demand for new and varieties of product and
services forced marketer to think new way of marketing and online marketing has come to be a
good option for them. Customers are finding technology easier and this is reflecting in marketing
as well. The increase in acceptance and response of online marketing can be drawn out from the
impressive growth rate by 50% since last year (2016). By the end of 2017, the contribution of e-
commerce in total retail sale reached to 8.2% ($2197 trillion USD). Amazon, e-Bay and Alibaba
are the three giant who are earning millions of dollar due to strong believe and acceptance of
customers. Regarding the contribution to national economy, if we take India, at present it is
contributing 0.16% of total GDP which will rise to 4% in next five years as per the forecasting
done by market researcher.
There is a need to understand why consumer are preferring online shopping more than physical
selling. What are the key reasons that marketer are looking for online marketing more than
ground selling? What motivates customers to go for online shopping? Does it has good for a
nation economic growth? These are the key areas which this report is going to highlight.
This is not a fundamental research study rather it is an extension to previous researches to bring
out new insights about this modern day trend.

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Introduction
Marketing is one of the essential part of our life. The concept of marketing has changed over a
period of time and the focus has shifted from production to product then from product to people.
Today marketing starts from customer and ends on customer as well. Thus marketer have been
applying various strategical moves to get closer to customers. Even they are seeking advices of
marketing experts and research scholars to identify new ways of doing marketing. Marketing
today has removed place, time, knowledge and financial risks by creating utilities (form, place,
time and Possession utility). This dissertation proposal is based on one of the aspect of marketing
concept changes. This academic research study is a step towards unfolding the consumer
behaviour with the change of marketing approach.
The dissertation topic I selected one of the approach of marketing which is growing at a higher
pace known as “online marketing and shopping”. In this study, I have taken two aspects into
consideration which are-1- How consumer behaviour changes from traditional marketing to
online marketing? And 2- what’s the impact of online shopping in a national economy?
The area of study is not a new thing but the growth and popularity of online shopping experience
motivated me to carry out academic research to find out the rapid growth of online shopping
among customers and what it brings to a nation economy. This area of study is relevant for
academics for many reasons. At first, this will be a small contribution towards consumer
behaviour study and secondly it is going to study the changes in national economy with online
shopping.
This dissertation study goes with reading out the existing research studies and other relevant
information sources to construct an idea about the research topic under study. This follows
establishment of research questions and hypothesis to validate. Then using research methodology
techniques, the research questions are answered. This report contains understanding and finding
from my study and finally the limitation and ethical consideration that I had to deal during
research study.

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Literature Review
Explanation to terms
Loo Lee Sim [et.al 2002] explained traditional shopping involves consumers to visit the stores
where they have to interact with seller to complete transaction. In this case, customers can select
product and services as per their need and want. In traditional shopping, the customer can see,
touch, feel and try the product and services before making up mind to purchase it. This is less
risky due to tangibility (in case of product) factor. Traditional shopping has the chance of
building relationship with seller and consumer gets chance to pay money directly to seller in
cash/card/pay check or any other mode.
Park, C. H [et.al2003] viewed online shopping as the act of purchasing product and services over
internet network. Online shopping doesn’t involve any personal interaction between customer
and seller. The buyer can see the product only but can’t have accessibility to touch, try and feel it
to come up for buying decision. The transaction takes place through three modes which are web
server, database system and dispatch system. Web server keeps online storefront and manages
payment transaction mode like linking it to bank or merchant server. Database system keeps the
inventory details, orders and supplies. Dispatch system works for warehousing and shipping to
locate the buyer to receive the ordered items.
MR Solomon [et.al 2014] mentioned consumer behaviour as the result of result of attitude,
interest, intention, preferences and decision made by a customer to buy a product or service. It is
process that takes place from recognizing problems or needs which goes until post purchase
evaluation. The buying behaviour varies with the items that a customer purchases. It can be
complex where the involvement of customer is high or habitual where the involvement is low.
The degree of behaviour varies with the product and service we purchase.
According to Oxford College of Marketing, consumer’s buying decision is based on two things
which are-1. Rational and 2. Emotional. For purchasing an item, either one of the factor may
come or both can come as well. The example for emotional consumer buying behaviour- A

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customer is more often choose that car servicing workshop where he or she normally goes.
Despite any other servicing agency charging lower price, the customer prefers the current
workshop. The reason behind such behaviour is trust, loyalty and confidence with the present
service provider.
Before we point out the differences in online and traditional behaviour, it is important for us to
understand the factors that influences the buying behaviour of consumer. Consumers would like
to purchase that product and services which provide greater utility. In addition to that customer
also looks for price, available fund and the convenience of buying the product and services. Thus
in order to understand the differences in buying behaviour between online and physical buying,
we need to understand these buying behaviour factors.
Park, C. H [et.al2003] mentioned in his research study that customers are greatly influenced
mainly due to four key factors which are- social, cultural, personal and psychological factor.
Cultural factor includes factors like region, religion, nationality etc. market segmentation takes
place according to this characteristics. Even wealth, occupation and education are the social class
factors that influences the buying behaviour.
In social factors, it is the references group, family and role and status of the individual that
effects the buying behaviour. For ex- it may be the opinion leader that led one person to buy a
specific product, it may be any important family member who forced you to buy the product or it
may be the roles and responsibility you play in family and society that pushed you to buy a
product or service. Buying of insurance policies, kitchen equipment, car etc. purchase decisions
are made due to this factor.
Personal factor is one of the significant reason which effects the consumer buying decision
much. Under this the factors that can come are- lifestyle, economic status, occupation, age,
personality and self-esteem. For ex- the choice of product and services varies with age cycle and
family life cycle. A high rank job holder buys expensive and luxuries items without carrying
about its longevity. The income of a person or family also reflects in buying behaviour like a
higher income individual or family likes to spend much than a lower income family who likes to
save much generally. People also takes buying decision considering their appearances, opinion,
dominance and aggression.

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There are also some psychological factors that effects buying behaviour of consumer. The
determinants of this factor are motivation, perception and beliefs and attitude. The motivation
can be psychological, biological or esteem need that can drive buying habits. Regarding
perception, it the selective attention, distortion and retention (3 Hit theory) that work for buying
decision making. Similarly for beliefs and attitude, the presence of brand image, personality and
equity that drives consumer minds towards a product and services. More or less these factors are
present in both these mode of purchasing goods and services.
To understand the difference, we have to understand the factors that makes people to select the
mode of buying and how they respond to it.
LW Turley [et.al2002] explained that it is the factors that bring buyers to think which will be a
good mode to buy a product and service. Here the factors are discussed below- (differentiation
point)
Number of choices – Today’s customers are looking for more options and choices. Thus when it
comes to traditional shopping, the choice gets limited. Even the range of product offering is
limited. In case of online platform, the choice and varieties of product is vast. Since they are
taking product and services from large number of suppliers thus they are able to offer such wide
choices to customer. The customers who are looking for varieties and wide choice, they prefer
online shopping.
Time factor- In case of traditional shopping, a customer needs to search stores after store to find
the best for him and her. It is not necessarily true that the customer may not find stores near
home. Thus it is a time consuming process. Online shopping doesn’t involve much time as all
product and services are displayed at one place i.e. web portal. A consumer who doesn’t have
time (like working professional, students etc.) prefers to shop online to save the time.
Information about product- In case of offline or physical shopping, normally people don’t get
much information about the product and services. Even the shopkeeper has limited information
(ex-grocery shop, general store etc.) about them. The customers who would like to go with their
own intuition, believe and knowledge prefers to go for online shopping as they find lots of
information about the product and services before they can make up their mind. This freedom is

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absence in store purchase or purchase takes place either at influence of shopkeeper or due to
impulsive nature of buyer.
Taste and preferences- Fashion trend changes from time to time. Those who likes to go with
current fashion, lifestyle (especially youth age group 16-40 years) choose to purchase online
because of latest availability in e-commerce websites. While those who don’t care about fashion
trend and like to try it physically to make buying decision go for shop purchasing.
Bargaining- Bargaining is an evident part of those people who wants to avail discounts and
rebates or additional value on their purchase. Bargaining is possible when customer is purchasing
at stores regarding price. So the consumer who would like have own price to buy the product and
services like to use in-store purchasing as in case of online purchasing the discounts and other
offers are fixed.
Exclusiveness- The customers who are innovators in nature try to get unique products and
services to justify their esteem or status. So such consumers look for online medium as there they
can find exclusive products and services. Though in-store, they can get those but the quantity is
limited.
Discreet shopping- Some products are such that in public, people feel hesitant to buy like for
ex- undergarments, hair removers etc. especially women prefer online mode to buy such
products instead of store purchase.
Risk of purchase- There can be two types of people- one who would like to try product and
services even without paying attention to physically experience and other one to make buying
decision only after trying the product and services. This also goes with the nature of product and
services. Some product and services involve huge income involvement and some may involve
risk of life. Thus if the product and services are of these two nature, consumers like to buy it
physically in most of the cases but for other cases where such risk factor is low, people take
chance to buy online.
Anxiety- Some people are not comfortable with surfing internet and e-commerce sites to get
their product and such people are anxious about the activities involvement to buy a product or
service online (not so tech-savvy) and it’s complicated for them as well. Those people until they

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have idea about technology and e-commerce buys products in stores but these days due to
spreading of technology knowledge, people are trying out online purchasing.
Past online experience- The consumer buying behaviour for online and offline purchasing
changes with the experience you has in past purchases. For ex- a person who cheated with online
purchase tends to avoid online purchasing due to psychological factor. This bad experience can
influence his/her family, friends, peers etc. who may be influenced by this experience.
Trust on online purchasing- The consumer perception towards online shopping also reflects in
their buying behaviour. The trust is related to the authenticity of particular site. Those who trusts
online sites prefers to buy from that mean but rest don’t go for such purchase due to fear of
cheating.
Income of consumer- consumer behaves in that way as his or her income is. The purchase of
product and services varies from one to other according to their earning. The person who earns
lot go for online purchasing as they don’t bother about the chances of monetary loss. On the
other hand who has limited earning thinks twice before going for online operation.
Instant gratification- The consumer behaviour changes with the immediate need. If a consumer
likes to have the product and service urgently, it normally goes for in-store purchasing. But if the
need is not urgent and customer is ready to wait for few days to get the product and service, in
that case consumer likes to go with online purchasing.
G Häubl [et.al 2000] explained the emergence of online shopping experience among people with
the following points- he pointed out these key advantages
 Online shopping people are finding is convenient than traditional shopping where one has to
visit one to other shop to get items. This mode provides you goods and services at door step.
 Online shopping is providing wide range of product and services even more than what a
super market and shopping mall have thus people are finding it a time saving approach.
 Price comparison is one of the key characteristics that customers are approaching more to
this mode. These days online sites are providing price charts to compare the product and
services that customer can find as per the budget.

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 The consumers are finding online shopping a better option due to its 24*7 availability. As the
life of people are getting busier, they are not finding time to go for in-store shopping thus
online sites are becoming the shopping stop.
 Another reason people find online shopping is good for them is the wide range of product
and service offering. Companies like Amazon, e-bay and Alibaba are offering more than
thousands of product and services which is attracting more customers towards these e-
commerce platform.
 Online shopping medium is getting popular for the products which people feel hesitant to buy
from stores. Such products are now available online and people are buying it regularly from
e-commerce sites.
 Marketing is not limited to a particular place and this is reality because of these e-commerce
concept and improvement in logistics services. Today a customer can order a product from
USA sitting in India with just one click. The people who like to try exclusive and limited
edition products prefer online mode of buying to get their desired items.
 Low price strategy is another reason that customers are finding online shopping medium is
good for their budget. These e-commerce companies are able to keep price lower by
eliminating the middlemen and bulk purchasing techniques.
There are some negative effects that online shopping carries. These effects are undeniable. EJ
Lee [et.al 2014] in her research work reported these following negative sides of online shopping-
 When a customer needs product and services immediately, online shopping fails to provide it
to customers. On an average, it takes 2 hours to 2 days at minimum to reach the customer in
online shopping.
 Online shopping is not easy for majority of goods like vegetables, milk and meat due to their
short life expectancy. Even customers don’t like to have such items without having physical
experience with it. (Touch-Feel-Try absence)
 Online shopping is a risky approach for the people who cares about budget and income. As
online purchasing involves input of your personal details (name, address, bank details etc.)
and all the transactions are operated over internet network thus it creates the risk of data
vulnerability (stealing or destroying of information). Thus many consumer perceives that it is
riskier to buy high value product and services online.

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 There is no scope of bargaining in online shopping. The people who like to have own price
and offerings, they don’t go for online shopping. Majority of developing countries have
majority of low and middle income consumers who have saving attitude look for shopping at
shop.
 Online business id dependent on two important factors which are- logistics and network.
Until these two things reach to people, this platform of shopping is not possible. Especially in
rural and distant area, people still prefer traditional buying.
 One of thing which makes online shopping side is absence of personal touch. Online
shopping doesn’t give personal assistance of seller regarding the use of product and services.
Not all can learn by themselves thus people look for traditional shopping in these cases.
 Authenticity proof in online shopping is very difficult. Most of the customer perceive that
buying online doesn’t guarantee that product and services will be genuine. Though the e-
commerce providers have been making effort to show the authenticity (Amazon assured) still
until people touch, feel and try, they won’t believe it completely.