Table 4 about here
Regarding the experiential types of shoppers, hypothesis H5a was empirically supported (Table 4). In particular, website character appears to increase loyalty in the experiential shopper segment. Interestingly, website character did not have any effect on satisfaction of any the two segments of shoppers. None of the other hypotheses H3b and H5 were supported. Controversially, convenience as a differentiator was found to have a positive effect on the loyalty of the experiential shopper segment. Earlier, it was found (Table 3) that convenience had a negative effect on the satisfaction of that segment. We suggest that more research is needed on this variable, as its effects are not as clear as expected.
Discussion
The study’s main findings can be summarised as follows:
1. There are two key segments of online shoppers, goal-oriented and experiential, as well as a third segment of mixed orientation (we empirically confirmed a conceptual suggestion by Wolfinbarger and Gilly).
2. E-tailer differentiation strategies based on convenience and customer care can increase levels of satisfaction when targeting the goal-oriented shoppers segment. Differentiation based on value for money and product quality can increase loyalty when confined to the goal- oriented shopper segment. Satisfaction as an intermediate objective leads to higher levels of loyalty in the goal-oriented shoppers segment than in the experiential shopper segment. As a result, differentiation based on convenience and customer care can influence indirectly (i.e., mediated by satisfaction) the loyalty of the goal-oriented shopper segment. These relationships are visually depicted on figure 2.
Figure 2 here
3. Differentiation based on product assortment and customisation leads to higher levels of satisfaction in the experiential shopper segment. Differentiation based on website character increases the levels of loyalty in this segment. Interestingly, satisfaction is not important for the level of loyalty in the experiential shoppers segment. These relationships are visually presented on figure 3.
Figure 3 here
Despite its focus on grocery e-tailing, this paper is important because of three broader contributions:
1) The study is a methodical benefit segmentation effort to determine the market scope in which online retailers can develop differentiation strategies.
2) It empirically examines the relationship between differentiation and scope strategies from a demand-driven perspective in an online retailing context. Specifically, the study empirically shows that certain e-tail differentiation strategies perform better in terms of satisfaction and loyalty generation when their scope is limited to specific segments of shoppers.
3) Results showed that satisfaction, one of the key concerns for many online retailers, is more effective as a loyalty-generation mechanism for the goal-oriented shoppers segment than for the experiential shoppers segment. The variety- seeking and information-seeking behaviour of the curiosity-driven experiential shoppers may explain this finding. From a theoretical perspective, the findings may provide a complementary explanation to the perennial question of why satisfied shoppers defect.
Surprisingly, the research revealed some counterintuitive results that may stimulate further research. For example, convenience--an important determinant for goal-oriented shopper segment satisfaction--was also found to be an important driver of experiential shopper segment loyalty. Future research should examine such discrepancies in the direct and indirect effects of the identified drivers of loyalty.
Managers of on-line stores may also benefit from the practical implications of our results. The overall message is that differentiation, if combined with the appropriate market scope, can lead to a competitive advantage. Regarding the determination of market scope, the goal-oriented shopper segment is possibly the most attractive for e-tailers, as it is the largest in size and the least volatile in terms of loyalty (given the fact that satisfied goal-oriented shoppers tend to be more loyal compared to other segments). However, in monetary terms, all segments are equally attractive as they tend to spend similar amount of money online (Table 2) and should not be disregarded.
Recent empirical evidence showed that successful online grocery retailers “strike a balance between their range of offerings and the ease of fulfilment” (see Ellis, 2003 – endnote 4). This suggests that the industry is intuitively aware of the perennial problem of simultaneously satisfying the goal oriented customer who wants something specific quickly and the experiential customer who enjoys browsing and impulse buying. Our results suggest that etailers can go one step beyond the ‘balanced’ midway approach and satisfy both types of customers with different strategies. We illustrated that certain differentiation strategies can be more effective in terms of satisfaction and loyalty generation when focused on specific segments of the market.
Therefore, to increase overall satisfaction and loyalty, etailers should segment the market into goal-oriented versus experiential shoppers and then, where technically possible, present different online retail strategies tailored to the needs of each segment. Differentiation based on customisation, product assortment and website design are more effective when directed to the experiential shopper segment. On the other hand, differentiation based on customer care, convenience and value for money are more successful when focused on the goal-oriented shopper segment. The quality of the stocked products is a differentiator that can be applied on a broader basis, as it similarly influences all segments’ loyalties.
How can an e-tailer recognise quickly and reliably whether a customer is goal-oriented, experiential or has mixed motivations, in order to tailor its strategies accordingly? Demographic variables have proved to be poor identifiers of the different benefit segments but we propose three possibilities to overcome this problem:
1) Managers could ask new customers directly about their motivations upon arrival on the web-side or upon registration or via email (see our motivation measure items). In case the full scale is too long and intrusive in practice, we propose a simplistic version in the following lines: How do you use the Internet? with two possible answers “I am looking for specific products when shopping on line. I want to get-in-and-out quickly” or “I constantly browse out of curiosity just to see if there’ anything that takes my fancy”. On the basis of this self-indicator, the company could tailor the offerings and the design of the site to the customers’ intrinsic motives.
2) A third approach is to use a hybrid procedure called “dual-objective segmentation” that combines benefit and demographic segmentation. In this approach, retailers could slightly compromise precision in determining the segments so as to increase the ability to identify them on the basis of demographic characteristics.39
The finding that satisfaction may not be sufficient to generate loyalty in all segments of the market exposes a weakness in the satisfaction generation and monitoring programmes. Interestingly, in the experiential shopper segment, loyalty can be increased directly by strategy (e.g., by provision of visually attractive websites and, surprisingly, by making the shopping experience more convenient), thus bypassing the effect of satisfaction. In the goal-oriented shopper segment, satisfaction is a reliable indicator of loyalty that can be complemented by value for money. Thus, satisfaction programmes will be more successful when they focus on the goal-oriented shopper segment.
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