1Study To Examine The Antecedents of Consumer

Purchase Intention Towards Online Buying In Pakistan

MBA RESEARCH PROJECT By 

Muhammad Noman Aslam (1246117)

Advisor: Faryal Salman   

Program: MBA – Day (3Credit Hours)

SZABISTSpring 2015

Agenda of Research

This research paper will discuss about the antecedents of consumer purchase intention towards online buying in Pakistan

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Background of Study

E-tailing is booming around the world, it has also taken momentum in Pakistan as well especially after the introduction of smart phones & ease of internet usage.

Still the large market is untapped in Pakistan; the need of hour is for the researchers to build in depth understanding of consumers.

Although E-tailing has brought wonders for both buyers & sellers but it possess different challenges & risks for both parties. It is essential for the marketers to cope up with these challenges to capture to get succeed in this arena. Country like Pakistan which is one of the developing countries possesses vast opportunities.

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Background of Study Online shopping has already been adopted by the educated

urban society but still there is huge market is untapped. Many people hesitate to use E-tailing due to various hazards.

Not much work has been done in this context to understand the consumer’s reluctant approach towards online buying.

Since digitalization has changed the way people connect with brands & go about towards purchasing it is imperative to build an understanding of the consumers that what the factors that act as hindrance for them to fully adopt e-shopping.

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Research Problem

Segment of E-tailing is growing at a rapid pace.

Trend of online shopping is taking momentum.

Scanty work available at the academic level despite the fact

that e-tailing is booming & getting popular.

Need of the hour is to learn about consumers to cope up with

new challenges of this segment.

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Research Questions What is the influence of familiarity in building consumer’s purchase

intention? How much the website reputation builds up the consumer’s purchase

intention? How much the security problem affects the consumer’s intention to purchase? What is the impact of third party seal on consumer’s purchase intention? What is the impact of lack of privacy on consumer’s purchase intention? How much the perceived risk impact on consumer’s purchase intention? How much the perceived quality influence consumer’s purchase intention?

Research ObjectivesBroader Objective:To explore the key influencing factors that builds customer purchase intention.

Sub. Objectives:To determine the extent to which the familiarity with the website influences purchase intention.To determine the influence of lack of privacy on consumer purchase intention.To determine the influence of perceived quality on consumer purchase intention.To determine the impact of third party seal on consumer purchase intention.To determine the influence of website reputation on consumer purchase intention.To determine the extent to which the perceived security problem influence the consumer purchase intention.

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Justification:E-shopping is taking momentum in Pakistan. Scanty indigenous studies takes into account Pakistani consumer’s behavior towards online shopping despite the fact this method of e-tailing is gaining momentum and popularity.

Assumption:First stage of buying model is “Consideration” which depends upon purchase intention, therefore if we are able to control antecedents (like familiarity, third party seal, privacy protection, security, information quality, website reputation & risk) than high purchase intention can be created that leads to consider to purchase stage.

Scope & Limitation:We will incorporate current and potential users to find out the existing gap. The major target audience would be youngsters as they are more internet users as well as early movers. only questionnaire will be use within Karachi due to time & budget constraints.

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Literature References Constructs Discussed

The first stage of consumer buying model is consideration which is dependent upon purchase intention that can be build up through increasing the consumer trust & lowering perceived risk. Trust can be build up by improving the factors like familiarity, privacy protection, security, quality information, website reputation & third party seal therefore these antecedents positively correlated with purchase intention where as risk is negatively correlated.

Third party seal doesn’t impact purchase intention but only reduce risk, therefore it has the lowest impact among all the antecedents.

Familiarity has the strongest impact over purchase intention.

(Kim, 2008) Consideration, Purchase intention, Risk, Trust, Familiarity, Third Party seal, Privacy Protection, Security Protection, Quality Information, Website Reputation.

Usefulness, ease of use & enjoyment will create attitude towards online buying which is influenced by trust, past experience & product characteristics.

This study tried to focus on attitude of people (European) instead of deriving factors that incorporate by many studies.

Exogenous factors like product characteristics, past experience, personality & situational factors have an impact on E-tailing.

(Lee, 2001) Intention to buy online Usefulness Trust Ease of use. Enjoyment Past Experience Product characteristics

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Literature Review

Literature References Constructs Discussed

Trust, risk, usefulness & ease of use builds attitude towards online buying.

There was significant impact of trust & technology on purchase intention but no significant impact of ease of use & usefulness found.

It argued that just like Herzberg model, hygiene can only affects the dissatisfaction but doesn’t build satisfaction. Similarly, risk, perceived usefulness & ease of use are threshold, they build negative impact if missing but doesn’t build any positive impact if they are fulfilled. This enlighten a new angel of looking at antecedents which never been done before.

(Heijden, 2003)

E-buying attitude Trust Risk Perceived

Usefulness Perceived Ease of

use

Online shopping is getting trendier among students & professionals.

Price is the one factor of attraction towards E-buying in Pakistan.

Many people hesitate to share their personal as well as financial information that they fear that it could be misused.

(Nazir, 2012) Online buying Price &

Convenience Trust & Security Familiarity Promotion &

discounts deals Privacy, Social,

Psychological & emotional factors.

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Literature Review

Theoretical Framework11

Familiarity

Privacy Protection

Third party seal

Security Protection Information

QualityWebsite

ReputationPerceived Risk

Purchase Intention

Research Methodology12

Research Approach: It was quantitative in nature, we used exploratory approach. This will help us to evaluate precisely which of the antecedents is affecting the purchase intention.

Population : We will approach internet users either they do E-shopping or not.

Data Tool Collection: Close ended questionnaires were used to collect data which is cost effective & suitable for the nature of this research.

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Sample Sizes

% Margin of Error 95% Confidence 99% Confidence

± 1 9,604 16,590

± 2 2,401 4,148

± 3 1,068 1,844

± 4 601 1,037

± 5 385 664

± 6 267 461

± 7 196 339

± 8 151 260

± 9 119 250

± 10 97 166

Source :Parker & Rea, Designing and Conducting Research

Sample Size & Sampling Method : We used non probability sampling technique using convenient sampling approach, data was collected from 400 respondents.

Hypothesis Familiarity:H0: Familiarity is not significantly correlated with purchase intention.

Third Party Seal:H0: Third party seal is not significantly correlated with purchase intention.

Privacy Protection:H0: Privacy protection is not significantly correlated with purchase intention

Security Protection:H0: Security protection is not significantly correlated with purchase intention.

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Hypothesis Continued… Information Quality:H0: Information quality is not significantly correlated with purchase intention.

Website Reputation:H0: Website reputation is not significantly correlated with purchase intention.

Perceived Risk:Ho: Perceived risk is not significantly correlated with purchase intention.

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DemographicsAGE

  Frequency Percent Valid PercentCumulative Percent

Valid 18-28 330 82.5 82.5 82.529-38 70 17.5 17.5 100Total 400 100    

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Gender  Frequency Percent Valid Percent Cumulative

PercentValid Male 203 50.7 50.7 50.7Female 197 49.3 49.3 100.0Total 400 100.0 100.0  Education  Frequency Percent Valid Percent Cumulative

PercentIntermediate 21 5.3 5.3 5.3Graduate 212 53.0 53.0 58.3Post Graduate

167 41.7 41.7 100

Total 400 100 100  

DescriptiveDescriptive Statistics  

  Frequency Minimum Maximum Mean Std. Deviation

Familiarity 400 2.00 5.0 3.5900 .52984

Third Party Seal 400 1.33 5.0 3.7133 .80172

Privacy 400 1.33 5.0 3.7675 .80937

Security 400 1.50 5.0 3.9175 .73624

Information Quality 400 1.67 5.0 3.3958 .80567

Reputation 400 0.67 5.0 3.8025 .78990

Risk 400 1.67 5.0 3.5833 .82582

Purchase 400 2.0 4.83 3.5771 .64098

Valid N (list wise) 400        

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Interpretation: All the constructs are positively contributing towards our model as the mean value for all the constructs are greater than 3, also std. deviation is greater than 0.5

Reliability Test Reliability Statistics

  Cronbach’s Alpha N of items

Overall 0.866 29

Familiarity 0.747 3

Third party Seal 0.763 3

Privacy Protection 0.688 6

Security Protection 0.699 4

Information Quality 0.719 3

Website Reputation 0.611 3

Perceived Risk 0.647 3

Intention To Purchase 0.613 4

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Interpretation: The reliability test shows the positive results as the Cronbach’s Alpha is greater than 0.60 which is the benchmark to prove reliability

Correlation19

Correlations

Familiarity

Third

Party

Seal

Privacy

protection

Security

protection

Information

Quality

Website

reputation

Perceived

risk

Intention to

Purchase

Pearson

Correlation

-.077 -.119* .079 -.048 -.066 -.179** -.032

Sig. (2-

tailed)

.123 .017 .113 .339 .186 .000 .524

N 400 400 400 400 400 400 400

Perceived risk

Pearson Correlation

.343** .261** .454** .522** .487** .416** 1

Sig. (2- tailed)

.000 .000 .000 .000 .000 .000

N 400 400 400 400 400 400 400

Third party Seal & Website reputation are highly correlated with purchase intention.

Familiarity, privacy protection, security, information quality & perceived risk has no correlation with purchase intention.

But, all the constructs were highly correlated with each other.

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Confirmatory Factor Analysis

CFA for Familiarity  CFA

LoadingI buy from those pages to which I’m familiar with. .862I usually buy from the website whose process of purchasing is familiar to me.

.855

I feel confident while purchasing from the familiar website .727

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  CFA for Third Party Seal CFA Loading

 

 I feel secure in terms of privacy when I see the third party seal. .790 Prefer to buy from Websites that carry such an endorsement. .820 Third Party seal make me feel safer while making transaction. .861

CFA for Security Protection  CFA

LoadingThe e-retailer has the responsibility to keep my personal information secret.

.758

Secure electronic payment system build my confidence to buy from the particular website.

.769

I repurchase from the website that ensure the security of the transaction.

.744

I’m willing to use my credit card only when I believe that seller implements security measures

.649

The minimum CFA loading should be 0.3 to prove the validity of any construct (hair et al, 1998).

CFA for Privacy Protection  CFA

LoadingI have doubts that my personal information can be access by unauthorized person while online shopping.

.703

I even pay a bit higher price to the website that I believe will secure my personal information.

.580

Too much personal information requirement makes me reluctant to buy online. .421Privacy of my personal information is my one of the key priority while online shopping.

.827

I don’t buy from the website that I believe might sell my personal information to other vendor

.735

I avoid e-shopping because I have the fear that my personal information can be hacked or used by unauthorized person.

.463

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CFA Information Quality  CFA

LoadingReliable & high quality information creates my likelihood to purchase. .863Sufficient information is essential to make purchase decision .829I feel more confident when I find the reliable & timely information on the website .701

Confirmatory Factor Analysis

CFA for Website Reputation  CFA

LoadingI prefer to buy from the well-known reputed websites. .775Reputation of the seller or the website is a key factor towards purchase consideration or purchase.

.778

I believe people (online seller) are reliable generally. .699

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CFA for Perceived Risk  CFA LoadingPurchasing online inherent the risk factor (defective / unsatisfactory quality) compare to traditional shopping.

.775

The more I feel risk the lesser I make purchase online .769E-buying involves financial risk compare to traditional shopping. .752

CFA for Intention Purchase  CFA LoadingI am likely to purchase the products(s) through online website .817I am likely to recommend online buying to my friends .538I am likely to make another purchase from online web site if I’m satisfied with the quality of the product that I bought previously

.634

I am likely to say positive things about online sites. .712

Confirmatory Factor Analysis

Discussion

Previous studies shown argued that, to build the strong purchase intention you need to build familiarity, make the consumer feel more secure, provide quality information also make him/ her feel less risky while making transaction.

But we found that affect based antecedents like third party seal & positive reputation of the website have more significant impact over purchase intention.

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Conclusion & Recommendation People feel secure to buy from reputable companies also, those who

are endorsed by independent third parties. So, marketers can create strong purchase intention by building up

positive reputation and endorsing through third parties. This study will help the marketers to build an in depth

understanding about the consumers also to create better strategies. It will also help the researchers to build upon the body of

knowledge on the subject from here on. More antecedents can be added for further studies to enhance the

acumen of knowledge about the subject because the trend of e-tailing is on rife.

Product specific antecedents can be add on for future studies.

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