Over 1.5bn people across the world now regularly use the internet. UK shoppers alone spent over £13billion online in Q408. As a marketing media the internet is eclipsing all comers. Given all of this isn’t it rather odd that there is no Wiki entry for ‘Online Consumer Psychology’ yet, no authoritative website on the subject and just one academic text dealing with the topic that assembles papers delivered at a conference in 2001 (decades ago in the web world!).

Why is this? Well, perhaps too few marketers, brand managers and their agencies have been asking just that question - Why? Much, if not all, of the focus has been on quantitatively monitoring and measuring online behaviour and transactional data. The standard web metrics are great for understanding ‘where’ and ‘how much’, a lot less great in helping us understand ‘who’ and most crucially ‘why’. Marketing and advertising are increasingly behind the curve of online consumer behaviour, in part at least because they haven’t fully understood the psychological drivers, attitudes and motivations that underlie these behaviours.


ONLINE CONSUMER BEHAVIOR

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The AISAS model is pretty simplistic and while it’s not the best online behaviour model but I use it for 2 reasons:1) It’s simple and effective in showing marketers that there’s a shift in consumer behaviour online. Most people have Google-d a product before buying it. I simply point out that what they find is the word of mouth generated by other consumers futher down in the Share stage.2) It explains how traditional media fits in with social media. Traditional media is great at generating awareness and interest but can’t reach the consumer when they are considering if they should buy the product/service. In the AISAS model, this consideration and research happens in the Search stage. Ultimately your social media marketing efforts would be focused on the Share stage to encourage consumers to tell their friends and produce reviews, ratings, etc, feeding back to the Search stage.

THE CONSUMER PURCHASE DECISION-MAKING PROCESS 
A Generic Purchasing-Decision Model 
- Product brokering 
   Deciding what product to buy. 
Merchant brokering 
  Deciding from whom (from what merchant) to buy a product. 
A Customer Decision Model in Web Purchasing
MASS MARKETING, MARKET SEGMENTATION, AND ONE-TO-ONE MARKETING 
  one-to-one marketing Marketing that treats each customer in a unique  
   way.
Personalization: The matching of services, products, and advertising content with individual consumers and their preferences. 
User profile:  The requirements, preferences, behaviors, and demographic traits of a particular customer.

Major strategies used to compile user profiles: Solicit information directly from the user. Observe what people are doing online: cookie A data file that is placed on a user’s hard drive by a remote Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site.

- Build from previous purchase patterns 
- Perform marketing research 
- Make inferences 
- Behavioral targeting :  The use of information collected on an 
  individual’s Internet-browsing behavior to select which advertisements  
  to display to that individual. 
- Personalized services 
- Individual services 
- Universal services

CUSTOMER LOYALTY 
e-loyalty Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically. 
TRUST IN EC 
trust The psychological status of willingness to depend on another person or organization.

METHODS FOR CONDUCTING MARKET RESEARCH ONLINE 
WHAT ARE MARKETERS LOOKING FOR IN EC MARKET RESEARCH?
Market Segmentation Research

MARKET RESEARCH FOR ONE-TO-ONE 
- Direct Solicitation of Information lImplementing web-based surveys. 
- Online focus groups lHearing directly from customers.

Observing Customers 
- Transaction log A record of user activities at a company’s Web site. 
clickstream
- Behavior Customer movements on the Internet. 
Web bugs 
- Tiny graphics files embedded in e-mail messages and in Web sites that transmit information about users and their movements to a Web server. Spyware 
- Software that gathers user information over an Internet connection without the user’s knowledge.

Clickstream data
- Data that occur inside the Web environment; they provide a trail of the user’s activities (the user’s clickstream behavior) in the Web site. 
Web mining 
- Web mining explores both Web content data mining techniques for discovering and extracting information from Web documents and Web usage.

Collaborative filtering 
- A market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles.  
- Rule-based filtering 
- Content-based filtering lActivity-based filtering

LIMITATIONS OF ONLINE MARKET RESEARCH AND HOW TO OVERCOME THEM lBIOMETRIC MARKETING (Human touching system) 
Biometrics :  An individual’s unique physical or behavioral characteristics that can be used to identify an individual precisely (e.g., fingerprints).

ORGANIZATIONAL BUYER BEHAVIOR 
A Behavioral Model of Organizational Buyers 
THE MARKETING AND ADVERTISING PROCESSES IN B2B

METHODS FOR B2B ONLINE MARKETING 
- Targeting Customers lElectronic Wholesalers 
- Other B2B Marketing Services

OVERVIEW OF WEB ADVERTISING 
interactive marketing Online marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers and consumers can interact with advertisers/vendors.

SOME INTERNET ADVERTISING TERMINOLOGY 
ad views The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views. lbutton A button is a small banner that is linked to a Web site. It can contain downloadable software. lpage A page is an HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files. It can be generated statically or dynamically.

Click (click-through or ad click) A count made each time a visitor clicks on an advertising banner to access the advertiser’s Web site. lCPM (cost per thousand impressions) The fee an advertiser pays for each 1,000 times a page with a banner ad is shown. 
- Conversion rate The percentage of clickers who actually make a purchase.
Click-through rate 
The percentage of visitors who are exposed to a banner ad and click on it. 
Click-through ratio 
The ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad. 
Hit 
A request for data from a Web page or file.
Visit  A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit. Unique visits A count of the number of visitors entering a site, regardless of how many pages are viewed per visit. 
Stickiness  Characteristic that influences the average length of time a visitor stays in a site. 
 Advertising networks  Specialized firms that offer customized Web advertising, such as brokering ads and targeting.
Banner  On a Web page, a graphic advertising display linked to the advertiser’s Web page. 
Keyword banners  Banner ads that appear when a predetermined word is queried from a search engine. 
Random banners  Banner ads that appear at random, not as the result of the user’s action.
Banner swapping An agreement between two companies to each display the other’s banner ad on its Web site. 
Banner exchanges Markets in which companies can trade or exchange placement of banner ads on each other’s Web sites.    
POP-UP AND SIMILAR ADS 
- pop-up ad  An ad that appears in a separate window before, after, or during Internet surfing or when reading e-mail. 
pop-under ad  An ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen. - Interstitial  An initial Web page or a portion of it that is used to capture the user’s attention for a short time while other content is loading.
E-MAIL ADVERTISING E-Mail Advertising Management - E-mail hoaxes (Mailing list distribution)    Fraud (spamming) 
- E-Mail Advertising Methods and Successes 
NEWSPAPER-LIKE AND CLASSIFIED ADS 
- Classified Ads
SEARCH ENGINE ADVERTISEMENT 
Improving a Company’s Search-Engine Ranking (Optimization) 
Paid Search-Engine Inclusion - Advertising in social networks 
ADVERTISING IN CHAT ROOMS, BLOGS, AND SOCIAL NETWORKS - Advertise in Videos OTHER FORMS OF ADVERTISING 
Advertorial (main page) An advertisement “disguised” to look like editorial content or general information.
    -   Google—The Online Advertising King 

Web 2.0 and Advertising 
Advertising in Newsletters 
Posting Press Releases Online 
- Advergaming The practice of using computer games to advertise a product, an organization, or a viewpoint.
Affiliate marketing  A marketing arrangement by which an organization refers consumers to the  selling company’s Web site. 
ADS AS A COMMODITY 
viral marketing Word-of-mouth marketing by which customers promote a product or service by telling others about it.   
 - - Viral Marketing in Social Networks 

CUSTOMIZING ADS Webcasting : A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user. 
ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS Live Web Events( Microsoft Web Seminars) 
- Admediaries Third-party vendors that conduct promotions, especially large-scale ones. 
Selling Space by Pixels: 
  The Case of Million Dollar HomepageAdvertising in Second Life and      
   Other Virtual Worlds 

PERMISSION ADVERTISING 
Spamming 
Using e-mail to send unwanted ads (sometimes floods of ads). 
Permission advertising (permission marketing) 
Advertising (marketing) strategy in which customers agree to accept advertising and marketing materials (known as “opt-in”).

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Google AdWords is the most affordable and effective advertising platform in the world. The main benefits of Google AdWords are: Reach: Access to 80% of US internet users along with a strong global presence. Cost: The cost-effectiveness of pay-per-click advertising is unrivaled among other advertising channels. Timing: Ads are shown exactly when a user is actively searching for a specific product or service. Flexibility: Unlimited changes are allowed, giving Advertisedge the ability to launch dynamic ad campaigns.

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Understand the decision-making process of consumer purchasing online.Describe how companies are building one-to-one relationships with customers.Explain how personalization is accomplished online.Discuss the issues of e-loyalty and e-trust in EC.Describe consumer market research in EC.