B. Structural Equation Modeling (SEM) Analysis




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Figure 1. Trust Transfer Process (TTP)

In the mid-1990s, many firms began performing marketing activities both offline and online (Type 2). As the Internet has proven an ever more effective global communication medium, marketing strategies have shifted from offline to online channels. One key issue has been whether consumer trust, something offline firms had worked for years to accumulate, would translate into favorable perceptions of online products. Examples both support and cast doubt on such trust transfer. Offline-turned-online channels such as Barnes & Noble Company (http://www.barnesandnoble.com) and Samsung Electronics Corporation (http://www.sec.co.kr) have maintained offline trust and brand loyalty online as well as offline. On the other hand, FTD (Florists’ Trans world Delivery) and Hallmark have had trouble leveraging their offline business into online successes [15].


Although many pure online companies have fizzled out, some continue to succeed (e.g., Dell Computer). Continuing questions about Dell’s survival prospects are based on whether the online trust it has built thus far will remain stable in the future, when stronger competition is expected. It follows, then (Type 3), that if existing online companies wish to expand their online products and service offerings, they will have to maintain or increase their level of consumer trust. Stewart [96] suggests that, in online B2C, trust transfers from trusted websites to unfamiliar websites based on hyperlinks between them.
There are rare cases of Type 4 trust transfer, in which customers’ trust in online channels move to offline channels. In South Korea, which has a very high Internet adoption rate due to its highly advanced Internet infrastructure, a number of successful online companies have expanded their business into offline channels. In the home shopping industry, two companies, CJ Home Shopping (www.cjmall.com) and GS Home Shopping (www.gseshop.co.kr), have successfully opened offline shops, taking advantage of their online reputation. MISSHA (www.beautynet.co.kr), a quality-based and low-priced cosmetics company that originally started as a pure online company and accumulated a solid reputation by innovating a process of developing new cosmetic products on the basis of online polls, is recently receiving a great deal of attention from the Korean cosmetics industry and mass media, due to its fast and successful expansion into offline markets.
In Figure 1, TTP is categorized as either intra-channel (Types 1 and 3) or inter-channel (Types 2 and 4). Regardless of type, TTP indicates that trust amassed over time in one channel (online or offline) may influence the evaluation of a product or service in the same channel or in another channel.
A customer’s evaluation of a new brand is based on the schema developed from experience and knowledge of it [66]. Customers evaluate products and services in order to reduce transaction risks [12], and it has been established that customers use their experience to determine their purchase intentions [86]. The consumer schema remains in memory and is converted into trust in the vendor. Knowledge of TTP can help marketing strategists enhance consumer loyalty and expand it into different channels.

This study fills a research gap by focusing on Type 2 (Offline-to-Online) TTP, which has received almost no attention. Offline to online TTP is a pervasive phenomenon, since most businesses and individual customers are already involved in some form of e-commerce or Internet business. Type 1 (Offline-to-Offline) TTP has already been studied by numerous researchers [14, 54, 82]. Once an offline brand (or company) has succeeded in acquiring a certain level of consumer trust, it can extend easily into another offline business under the same brand category. By contrast, real cases of Type 3 (Online-to-Online) and Type 4 (Online-to-Offline) TTP are relatively rare, although Stewart [96] has addressed Type 3.





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B. Structural Equation Modeling (SEM) Analysis

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