Internet Marketing and Customer Satisfaction in Emerging Markets: The Case of Chinese Online Shoppers
Internet Marketing and Customer Satisfaction in Emerging Markets: The Case of Chinese Online Shoppers
Internet Marketing and Customer Satisfaction in Emerging Markets: The Case of Chinese Online Shoppers
www.emeraldinsight.com/1059-5422.htm
CR
21,2 Internet marketing and customer
satisfaction in emerging markets:
the case of Chinese online
224
shoppers
Maktoba Omar
Napier University Business School, School of Marketing,
Tourism and Languages, Edinburgh, UK
Ian Bathgate
University of East London, Business School Docklands Campus,
London, UK, and
Sonny Nwankwo
Business School, University of East London, University Way, London, UK
Abstract
Purpose – The purpose of this paper is to examine the factors that influence customer satisfaction
among Chinese online shoppers. It applies the normative categories identified in the literature and tests
them for effect in the emerging Chinese online consumer market.
Design/methodology/approach – Electronic survey instrument was used to obtain data from
Chinese online shoppers. The survey covered 15 composite items that could potentially influence the
level of customer satisfaction related to online shopping experience. These, in turn, were further
decomposed to six driving factors (convenience, product performance, customer services, security
concerns, web site interactions, and web site sensory stimulations).
Findings – It was possible to identify and classify the most critical moderators of online customer
satisfaction (most of which are consistent with similar studies in the West). Paradoxically, the data
also revealed the existence of some behavioral differences which are context-specific.
Research limitations/ implications – As is usually the case with online surveys, there was limited
scope for free-response data to be generated. Also, the study concerned itself with the factors influencing
customer satisfaction, but did not examine the relationship with online purchase intention and loyalty.
Originality/value – This paper provides some fascinating insights into the factors that moderate
the level of customer satisfaction among Chinese online shoppers. These are likely to become the
important determinants of success (or failure) of companies’ customer satisfaction management
programs related to online shopping in China and, therefore, of practical value to companies engaging
in internet marketing.
Keywords Customer satisfaction, Internet shopping, China, Emerging markets
Paper type Research paper
Introduction
Competitiveness Review: An Previous research on online shopping has provided useful perspectives and developed
International Business Journal our understanding of the behavior of online shoppers (Drennan et al., 2006; Ha, 2006;
Vol. 21 No. 2, 2011
pp. 224-237 Cheung et al., 2005; Cho and Park, 2001). However, most research efforts on the topic
q Emerald Group Publishing Limited have been based on western contexts (Bathgate et al., 2006). This despite the fact that
1059-5422
DOI 10.1108/10595421111117489 there has been a dramatic increase in the growth of electronic commerce in China and
some of the emerging markets in Asia. However, research in the region is still Chinese online
conspicuously less intense when considered alongside comparable efforts in western shoppers
countries (Park and Kim, 2006).
Electronic commerce in China is a relatively recent phenomenon but growing rapidly. In
Beijing, for example, internet penetration reached 30 percent in 2007 for the first time and
75.9 percent of Chinese internet users (about 104 million people) use broadband connections
(China Internet Network Information Centre (CNNIC), 2007). In the Asian region, South 225
Korea enjoys the largest total internet percentage penetration with 76 percent; China has an
equivalent figure of 22.4 percent. Broadband usage in China had overtaken Japan in 2004
and is now second only to USA. Comparable statistics in North America suggests
that internet penetration has grown 120 percent between 2000 and 2007 and reached a
71 percent penetration of the population (Internet World Stats, 2007). When further
analyzed, a “digital divide” is evident between rural and urban areas. China’s internet users
are mainly concentrated in the large cities and eastern coastal provinces – chiefly
Guangdong, Jiangsu, Shanghai, Beijing, Shandong, and Zhejiang (CNNIC, 2006). The 2007
CNNIC report indicated that rural internet usage had reached 5.1 percent whilst the
equivalent urban penetration rate was four times larger at 21.6 percent. The report
indicates that most usage in rural areas is for entertainment (online music, games, movies,
and TV shows), with a very low percentage of rural consumers engaging in online
purchasing, e-banking, or other forms of e-trading. This would appear to indicate that any
analysis of on-line behavior would be largely focused on urban areas. Nevertheless, the
formidable market prospect in terms of sheer volume at current levels of penetration and
the potential for further growth in the Chinese market imposes a need to reflect on the
potential of internet marketing to contribute to the economic growth that is today taking
place in China. An important dimension is to seek ways to enhance satisfactory buying
experiences through the internet. Given the volume of research in this area that is western
biased,(Lee et al., 2006; Bathgate et al., 2006), it is of academic interest to identify those
drivers of e-consumer satisfaction that are unique to the Chinese market and those that are
generally applicable to all e-commerce. Therefore, this study attempts to analyze and test
the veracity of commonly identified drivers of e-consumer satisfaction in the context of
China. The overarching aim is to provide a synthesis of the factors that influence
satisfactory shopping experience among Chinese on-line shoppers.
Contextual background
Against the backdrop of the relative nascence of internet shopping in China, the rapid
growth of internet usage mirrors, the country’s economic renaissance and movement
towards the mainstream global economy. Concurrent with the rapid growth of the Chinese
economy is the positive attitude of foreign investors towards the country, which has seen
the country ranked by multinationals companies as one of the most promising markets.
With per capita GDP of around $1,100 (equivalent to $5,500 when adjusted for purchasing
power – Yu, 2006) in 2003, China by then had 79.5 million web surfers. Yu (2006)
projects that around 40 million households will earn around $24,000 per annum in terms of
purchasing power. With the emergence of such huge middle class sub-population,
the internet becomes a tool with huge exploratory potentials in terms of accessing the vast
Chinese market.
According to the bi-annual Statistical Survey Report, the country added another
20.4 million new internet users by the end of 2005 and had grown to 162 million users
CR in 2006. In total, internet penetration in China has grown in six years from 1.7 percent in
2000 to 12.3 percent in 2006. This represents a growth in users from 22.5 million in 2000
21,2 to 162 million in 2007, a growth rate of 720 percent. Broadband usage as of June 2007
stood at 122 million of which 48.5 million were broadband subscribers (Internet World
Stats, 2007).
The make up ratios of Chinese “netizens” are male (59.3 percent) to female (40.7 percent)
226 and unmarried (57.8 percent) to married (42.2 percent). The profile of users since 2003
appears to be changing slightly from 60.9 percent male, 39.1 percent female, 58.9 percent
unmarried, and 41.1 percent married, respectively,(China Media Intelligence, 2003).
A CNNIC report (2002) stated that the occupations of the netizens include civil servants
(8.0 percent) technology experts (15.7 percent) office workers (10.3 percent) commercial
managers (8.9 percent) teachers (6.2 percent) commercial and service sector workers
(10.3 percent) agriculture, forestry and fishing workers (1.0 percent) manufacturing and
transport workers (6.2 percent) military (0.9 percent) students (28 percent) unemployed
(4 percent), and others (0.5 percent). CNNIC also reported that 31.9 percent of the internet
users bought online in the past year – items of purchase include books, computer-related
products, and electronic. “White goods” are hot internet transaction commodities. People’s
Daily Online reported that during the severe acute respiratory syndrome epidemic in 2003,
on-line shopping and message service found a second development opportunity. Among
the surveyed netizens only 8 percent never visited a shopping web site. A total of
40 percent of them routinely made on-line purchases. The netizens between the ages of
18 and 30 remain the driving force, but this age group’s share of the whole community
dropped steeply from 91 percent in 1998 to 52.9 percent at the end of June 2003. This
decrease was attributed to the steady growth in numbers of adults (35 and older)
consumers going on-line (China Internet Information Center, 2003). What should be
considered formidable, contextually, is the market prospect in terms of sheer volume at
current levels of penetration and the potential for further growth in the Chinese market.
Against the backdrop of the rich and growing body of research in this area that is western
biased (Mitchell, 1999; Ueltschy et al., 2004; Lee et al., 2006), it is of academic interest to
identify those drivers of e-consumer satisfaction that are unique to the Chinese market and
those that are generally applicable to all e-commerce. The success of any business as
identified in most marketing texts is the satisfaction of customer needs in order to effect
repeat business (Kotler and Keller, 2007).
Conceptual background
According to Donthu and Garcia (1999):
[. . .] the increasing number of companies that offer internet access are providing consumers
with a convenient and inexpensive way to become members of the internet community [. . .]
the increase in the quantity and quality of available information on the internet and the
presence of well-known corporations and brands on the internet are also generating high
interest among consumers.
The internet has proved to be a tremendously powerful vehicle for marketing
purposes and has become the front-end application of consumer intelligence gathering
and consumer purchase facilitation. Arnott and Bridgewater (2002) suggest that
such interactivity increases the organization’s ability to understand consumer purchase
behavior. A viewpoint could be taken that consumption has become a “cultural
experience” (Kozinets, 1999) – this experience is enhanced by the web and has profound
implications for marketers in terms of different cultural orientations. In addition, factors Chinese online
such as low-entry barriers have brought more retailers into the e-marketplace (Chen and shoppers
Dubinsky, 2003) whilst consumers have greater bargaining power, increased choice,
and lower switching costs. Ranaweera et al. (2005) state that the increasing prevalence
of the internet coupled with the efficiency and convenience of on-line transactions
is likely to significantly change customer behavior and business practices. According to
Gentry and Calantone (2002), “an ongoing requirement in the twenty-first century is 227
that marketers must understand the impact of the network economy on buyer
behaviour” and by implication customer satisfaction. Devaraj et al. (2002) highlighted
the importance of analyzing customer behavior in terms of retail practices and in the
importance of addressing the concerns related to delivering satisfactory customer
experience in transactive relations. Similarly, Cho and Park (2001) found evidence of the
need to assess the dual role of the consumer as both user of technology and customer.
In the latter role, the level and ease of understanding of product detail, including the
delivery of the goods, play an important part in customer satisfaction. Such basic
information such as clarity of products change, return and refund policies, provision of
order information, and product arrival information all contribute to satisfaction
(Baroudi and Orlikowski, 1988; Bailey and Pearson, 1983; Richins, 1983).
A key differentiating factor in internet marketing is that consumer experience/behavior
occurs in a computer-mediated environment (CME). If it is accepted that parts of the
determinant of consumer satisfaction are word of mouth, past experience of usage, and
marketing communications (Zeithaml et al., 1993), then in a cyber environment this is
facilitated not just by interaction between the user and the organization, but also
interaction with the web site (Kim, 2002). The primary relationship is between the
consumer/sender and the mediated environment; hence, a two-step process is involved.
Mediated environments are created and then experienced. It can be argued that part of this
mediated, one-to-many environment is the virtual community as well as the primary
interaction between the individual consumer and the web site. Kim (2002) found that
interactivity enhances the experience and levels of satisfaction. Communication within the
CME/virtual community could be seen as allowing anonymous word of mouth, identified
by Zeithaml et al. (1993) as playing an important part in establishing buyer expectations
and perceptions of service quality (SERVQUAL).
Flavian and Guinalieu (2006) state that an individual’s loyalty and intention to return
to a web site is determined by levels of trust, which is also affected by perceptions of
privacy and security. Word of mouth can generate consumer trust and lessen perceived
risk. Trust in this context becomes the mediating variable between members of a virtual
group. This is especially relevant to the Chinese “collectivist” mind set in which Confucian
social “norms” is a key element in decision making (Park and Jun, 2003). George (2004), in
a study based on the “Theory of planned behaviour” as relating to the impact of privacy
and security issues on on-line purchasing intention, found that the more trustworthy a site
was believed to be the more likely positive attitudes were developed. George was also able
to make a link between belief in the trustworthiness of the internet and consumers’ belief
in their abilities to buy on-line. From a behavioral perspective, therefore, levels of
perceived risk could determine whether a consumer becomes a buyer or non-buyer on the
web (Schoenbachler and Gordon, 2002). The links between perceived risk and trust have
also been identified by Harridge-March (2006) from a marketing planning perspective
where an increase in trust in potential customers can lead to a reduction of perceived risk.
CR Trust and perceived risk then can be considered as moderators of behavior which
21,2 also extend beyond the virtual community to attitudes and perceptions towards
technology. From what is already known in the literature, concepts such as utility,
likeability, usability, and flow are all moderators of on-line consumer satisfaction
(Shackel, 1991; Gaines and Shaw, 2002; Gefen et al., 2003; Chen and Dibb, 2004). Cho and
Park (2001) linked consumer interaction with technology as a determinant of satisfaction
228 whilst Devaraj et al. (2002) link e-commerce to customer behavior outcomes (satisfaction)
through three constructs; technology acceptance model, transaction cost analysis, and
SERVQUAL models. These models have been tested in the electronic commerce domain
and are shown to be robust in determining consumer satisfaction and repurchase
intentions. Similarly, evidence suggests that interaction with the web site is influenced
by such things as web site appearance as indicated by over all design, colours used, and
navigation (DeLone and McLean, 1992).
Research efforts have also been extended to examine how emotional and cognitive
responses to visiting a web based store for the first time can influence on-line consumer
satisfaction and intentions to return and their likelihood to make unplanned purchases.
Whilst focusing on intentions to return to a virtual site, explanations based on the
“Theory of planned behaviour” (Ajzen, 1991) and the “Theory of reasoned action” (Fishbein
and Ajzen, 1975), have been stressed largely on the basis that behavioral intention can be a
strong predictor of actual behavior. Attitudes and perceptions (subjective norms) towards
risk, technology, vendor, web site as well as perceived behavioral control, become
precursors to any assessment of on-line satisfaction and are especially relevant in a
collective society.
A further component to consider could be cultural and demographic impacts
(Ueltschy et al., 2004). Sin and Tse (2002) confirm that there is a connection between on-line
behavior and consumers’ demographic, psychographic, attitudinal, and experiential
factors. Therefore, the focus is not on decision making as a process but more towards the
antecedents of that process, that is, in the development of attitudes. They also discovered
cultural differences in the effects of internet usage and perceived risk on buying behavior
(Choi and Leeet al., 2003).
It is recognized that customer satisfaction is a subjective aspect of consumer
behavior with no commonly agreed framework. Therefore, based on a synthesis from the
literature on components of customer value of internet shopping, six principal common
factors (and embedding features) can be considered crucial in the formation of customer
satisfaction:
(1) Convenience: ease of ordering and payment; simple navigational capabilities; easy
to operate search engines (Kim, 2002); ease of understanding of product
information; detailedness of product information; provision of differentiated
products for comparison; safe and fast delivery; anywhere available delivery;
delivery charge; variety of payment methods (Cho and Park, 2001). A result of these
aspects would be reduced levels of risk and increased trust (Shackel, 1991; Gaines
and Shaw, 2002; Gefen et al., 2003; Chen and Dibb, 2004, Harridge-March, 2006).
(2) Product performance: quality, brand, selection, price, suitable, and clear product
categories (Cho and Park, 2001).
(3) Consumer services: asynchronous contact via e-mail; (Kim, 2002) to include clarity
of products change, return, and refund policies; provision of order information,
product arrival information (Baroudi and Orlikowski, 1988; Bailey and Pearson, Chinese online
1983; Richins, 1983). shoppers
(4) Web site sensory stimulation: description of the exterior of a good; web site’s
color, structure, menu designs (DeLone and McLean, 1992).
(5) Web site social interaction functions: forum, chat room functions (Kim, 2002),
and auction functions.
229
(6) Security concerns: protection of privacy, security of the online payment, etc.
(Flavian and Guinalieu, 2006, George, 2004).
These important elements, as discerned from the literature, can then form the basis of
an internet-shopping satisfaction framework. These are then tested to check the
saliency and importance of each factor in influencing the customer satisfaction among
Chinese online shoppers.
Research instruments
A questionnaire method was used in this survey and conducted in Beijing. The
questionnaire was divided into two sections: Section A consisted of a list of questions
intended to probe the demographic variables of the respondents such as age, sex,
residence, and occupation. In addition, one of the questions was designed to establish
that the respondents had previously made purchases over the internet. Section B
contained questions aimed at gauging the respondents’ attitude to a range of variables
across the six determinant factors synthesized from the general literature and which
could possibly influence their satisfaction of internet shopping, using a five-point Likert
scale. The following determinant factors were focused on; convenience (ten variables),
product performance (four variables), consumer services (three variables), web site
sensory stimulations (two variables), web site social interactions (two variables), and
security concerns (two variables).
A pilot test to check the readability and reliability of the survey instrument
was successfully conducted before the commencement of full-scale data collection.
Subsequently, a total of 300 electronic mails were sent out with a link to the web site
where the questionnaire was displayed. There were 204 usable questionnaires, so the
overall effective response rate was 68 percent, which was considered adequate for
analysis and reporting (Babbie, 1990). The 204 effective respondents included males
and females, between the ages of 18 and 50, with different occupational backgrounds such
as government officers, technical persons, clerks, service persons, teachers, students,
unemployed people, and others. This is in accordance with the official statistics (by market
media report, 2003) of the China’s netizen’s demographic characteristics.
Using SPSS, a factor analysis was performed in the treatment of data. Results of the
factor analysis showed a factor structure consistent with the expected construct
structure with six factors. Reliability of the instrument was also examined. Both
reliability and validity were acceptable. For the factor analysis, varimax rotation was
performed to explain the variance of the six determinant factors. The result of reliability
analysis for the variables within each factor showed positive internal consistency. High
consistency was found in convenience with Cronbach’s alpha of 0.908: “web site sensory
stimulations” (0.823), “products performance” (0.793), “web site social interactions”
(0.721), “consumer services” (0.660), “security concerns” (0.362).
CR Research findings
21,2 The t-test result shows that there are 16 relevant items that influence consumer
satisfaction as applicable to Chinese consumers (Table I). These are:
These features span the six determinant factors already isolated for testing. Among
the features, there are nine most important items that are easily discernible: safe and
fast delivery, provision of order information/product arrival information, security of
230 the online payment, product quality, forum, chat room functions, easy to operate search
engines, provision of differentiated products for comparison, detailedness of product
information, and ease of ordering and payment. The means of t-test of these items are
all over 4.50. They should be considered the first-position and basic conditions of an
internet shopping web site.
The result also indicated that the most popular internet shopping web sites in China
were Sina shopping mall (http://mall.sina.com.cn), Eguo shopping mall (www.eguo.
com), Sohu shopping mall (http://store.sohu.com), Netease shopping mall (http://mall.
163.com/newmall/index.html), and 8848 shopping mall (www.8848.com/). It was found
that the success of those shopping malls depended on satisfying the 16 relevant items
identified. The results also revealed some subtle differences in consumer behavior to
internet shopping between China and other developed countries in relation to payment
methods (Cho and Park, 2001; Park and Kim, 2006). In most developed countries, the
mature technology of credit cards smooths out some of the problems relating to
methods of payment. In China, however, the case is slightly different because of the
significant population of consumers still preferring cash payments.
There are also other broader strategic issues to be dealt with by marketers. They must,
from the outset, come to a clear decision on the role, the internet is to play in marketing
strategy. More broadly, they must determine how internet marketing might impact
corporate strategy.
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21,2
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