Segmentation is to ‘identify homogeneous groups or customer segments in the market place that will respond in a consistent, predictable way to variations in the marketing mix (Reynolds, 2006)’. Previous market segmentation research studies indicate that market segmentation benefits firms in various ways. It directly influences the consumer decision-making process (Haley, 1968). Also, it generates new market segments and creates new business opportunities, which enables companies to overcome developing barriers and to achieve competitive differentiation. IKEA, Gillette and Microsoft are all successful examples. (Bowonder, 2010)
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The product that people choose to use or wear exactly reflects their life taste and social identity (Solomon and Barmossy, 2006). Belk (2003) think that the shoes consuming are crucial for both men and women which are not only a way of self presentation but also “inseparable parts of our extended selves”. “Shoes are the mirror of our souls.” Furthermore, people assume others from their footwear. They would rather bear the tortures from a pair of uncomfortable but stylish shoes than wear an average one, because they believe that shoes have the magic for their self achievement.
4.11 Consumer Attitudes towards Shoes
Women are known to be much crazier on shoes than men. A research in America in 2000 showed that women aging from 16 to 74 owned more than twice pairs of shoes as men did on average. And lots of women owned over 50 pairs of footwear while none of the male respondents owned more than 30 pairs. However, men spent almost 25 dollars more on their most expensive shoes than women (Belk, 2003).
Another survey of working women recently conducted by Mintel revealed why women are so keen on shoes. Forty-four percent of those who aged 18-34 said they needed two pairs of shoes for work, one for commute and the other one for wearing in the office. And almost two-thirds of participants said shoes helped them to achieve a fashionable working look (Dolliver, 2010).
But the report in Minter about footwear retailing in 2008 demonstrated that Younger consumers are looking for better but affordable quality while the older care more about comfort and durability. The younger, especially men, are much more willing to buy shoes online. Once experiencing successful online shoes shopping, they are more likely to repeat purchase. In 2008, only 5 per cent adults aged over 15 buy shoes online, in which those who aged 15-24 and 35-44 more frequently buy shoes on the Internet (Mintel, 2008).
4.2 Competitor Benchmark
Learning from the Icons in the same industry can help company quickly improve in an economically way. The most successful example online for shoes selling is Zappos.com from the USA. Although Chinese culture and economical environment are completely different from the USA, there is no border for business. Zappos’ business mode and managerial experience could be a good model for EA.
Zappos online shoes selling business is in common with EA’s e-commerce plan. It built up the brand online and reached $1 billion annual sales after 10 years effort (Zappos.com, 2009). There are more than 500 brands and 90,000 styles of shoes on Zappos.com with the price ranged from $20 to $2,000 to meet the needs of different consumer groups. Delivering high-quality online service and building up brand credibility by favourable WOM are the two key successful necessities to Zappos (BRAND WEEK, 2008).
The store experience and the product try-on experience are the two highlights of physical shoes stores that online shoes shopping can hardly compare at present. However, the customer service, entertainment marketing as well as no sale area limitation are the benefits that most physical stores can never reach. Craig Adkins, Executive Vice President of Zappos, said that they don’t compete with other online trade companies but compete with physical stores. The only reason that they have grown so quickly and won the game in the fierce competition is to offer the best customer service, product option and delivery speed possible (Zmzsk.com 2009). The interactive sections such as videos and blogs also provide more diversified customer experience and achieve the breakthrough of customer value. Namely, customer service, product variety, delivery and interactivity could be the four key points for EA’s e-commerce.
4.3 Market Data Research
There is barely any research about the shoes market or online market specifically focusing on the places EA plans to target (Beijing, Shanghai and Guangdong province). However, we could have a general understanding about the Chinese online shoes market as a whole from the small amount of literature. With the popularity of online business, a lot export trade companies have been stepping into the home market through the internet. Certain famous shoes companies also start to change their companies from traditional bricks and mortar to bricks and clicks, even “majority click” level. Needless to say, EA will meet the competitors’ threats when it starts the approach into the new market.
China is the largest footwear manufacturing base as well as the largest footwear consuming market around the world. The sales volume of Chinese shoes market is huge and steadily growing by years due to the large population and the annual improvement of disposable income. Those who live in the big cities such as Beijing and Shanghai as well as the coastal cities in China’s southeast have the greatest purchasing power.
According to ‘The 2009 China Leather Shoes Market Situation Analysis and Forecast Report’ from Beijing Heading Century Consulting Co. Ltd, 85% of the total shoes consumption in China is low-to-middle-level products whereas most high-end shoes are imported from abroad (Sewworld.com 2009). There is a gap of the high-end domestic footwear market for EA to fill.
Suffering from the economic recession, export trade shoes companies all consider stepping into the domestic market which contains numerous consumers and large consuming potential. But lots of them failed. The main barriers for those companies to open the home market are enormous variations of the outdated product style, lack of distribution channels, unfamiliarity with the market and huge costs of human and financial resources. Still, a great deal of export trade companies plan to have a finger in the pie despite of the difficulties (Cnxz.cn 2009). That means a chance for EA to survive in the dog-eat-dog world as long as the company finds the right way.
On the other hand, department stores and speciality shops are the main distribution channels of leather shoes, according to ‘The 2009 China Leather Shoes Consuming Market Research’ from Beijing Heading Century Consulting Co. Ltd, with 51.5% and 40.1%. Certain famous Chinese shoes brands, for instance, Belle, Aokang and Daphne, have occupied the majority of the domestic market and there is little market share left for those not that well-know SMEs (Sewworld.com 2009). The competition among physical stores is extremely fierce. Therefore, the SMEs start to explore a new distribution channel by opening the online market.
In fact, several shoes brands which have physical stores have opened the online market. Not only the SMEs, but also large and famous companies either have built an online shopping website or have set up a virtual store with B2C websites. According to the China B2B Research Centre, there are more than 100 million internet consumers in China in 2009, and the number of the SMEs with e-commerce has dramatically increased to more than seven million in the past six years. Nevertheless, online sales in the footwear industry are basically at the initial stage except for a few industry leading companies which have entered the Internet shoes market early and systematically operated it in a large scale (Zmzsk.com 2009). EA could seize the right moment to open up a new world.
4.4 Online Consuming Analysis
More and more people have joined the dramatically growing group shopping online, but still lots of people hold a conservative attitude towards online transaction. Risk perception about offering personal information, online payment and product quality etc. prevents consumers from further purchase behaviour. How can we encourage people to “be willing to take risk” (Schoormanï¼Œ2007)? How can we convert web visitors to buyers? Considerable previous studies proved that online trust building is the biggest issue facing e-marketing managers. Trust to a large extent determines the success of the relationship between buyer and seller and it is rather significant in the changeable e-business environment (Morgan and Hunt, 1994; Pavlou, 2003; Wang and Emurian, 2005). Establishing trust between shopper and sellers can reduce consumers’ uncertainty and rick perception. Furthermore, it has a positive impact on e-shopper’s purchasing behaviour (Lim et al., 2010).
There are manifold studies contributed to the definitions about trust. Deutsch (1962) thought that trust is an “actions that increase one’s vulnerability to another”; Moorman (1992, p315) defined that “Trust is the willingness to rely on an exchange partner in whom one has confidence”; Sitkin and Roth (1993, p373) referred that trust is “a belief in a person’s competence to perform a specific task under specific circumstance”. Whereas, Koufari and Sosa (2003) developed the concept of “initial trust”. In their opinion, trust can be built at the first time when people interact with the company, which directly influence the following consumer behaviour. Well-designed website and the good name of company can help visitors to form a positive attitude and against the risk of switching to competitors’ websites. Pleasant experience can gain a lot of new customers even at the first time. We agree that the first impression is very important, it may determine whether the future communication will continue or not. However, we believe that the temporary positive feelings aroused from the website are not equal to trust. Customers’ real faith towards the website requires companies to take continuous effort and to develop a good relationship with online consumers over time, such as offering an ongoing enjoyable interactive communication with customers. Furthermore, establishing and maintaining the trustful relationship can eventually affect the customers purchase intention (Bhattacherjee, 2002; Lee et al., 2001; Lim, 2001; Hoffman and Novak, 1996). “Purchasing online involves risk, especially when a person lack experience with the online firm (Schlosser et al., 2006).” In the particular case of EA, which just starts its approach to the domestic market, few people are aware of the company (reputation and size) and its products (brand and quality). Therefore, the progress of convincing consumers is fairly necessary and critical for EA, which means ongoing trust building is essential for EA to gradually convince its customers and maintain a good customer relationship. Thus, the present research is focused on investigating the importance and determinants of ongoing trust building.
Numerous researchers have studied the importance of online trust building as well as the factors that influence the construction of trust in the virtual environment. For instance, Bhattacherjee (2002) claimed three key dimensions about the e-commerce trust: trustee’s ability, benevolence, and integrity.
In his journal, he defines trustee’s ability as “the trustors’ (website visitors) perception of trustee’s (online company) competencies and knowledge salient to the expected behaviour”. For an online business, its website should clearly and successfully present the company’s capabilities and professional skills (e.g. EA’s expertise technology in making leather shoes) to increase the e-customers’ confidence via, for example, offering the list of the powerful partners, presenting detailed product or service information, designing an both attractive and functional (easy to understand/use/response) website. (Bhattacherjee, 2002)
Benevolence here is referred to the faith in an online business that the company is willing to do more/extra service for the customers without profit consideration. The service or behaviour the online companies take can increase people’s confidence and sense of security. It’s not possible for every company to offer extra service considering the additional cost. However, directed by the benevolent rules, online business firms should at least be completely aware that they need to respect their online consumers, fully understand their specific requirements, and work effectively and continuously on reducing web visitors uncertainties and worries. (Bhattacherjee, 2002)
Integrity, in the e-shopping context, means customers’ confidence to the firms that their online commercial activities are directed under “a set of moral principles or professional standards (Schlosser et al., 2006)”. In the practical virtual environment, the firms which conduct the integrity rules should attach great importance to the process of online transaction and relative service, the usage of consumers’ private data. These rules are practically linked with the realisation of company fulfilment, such as timely delivering, accurate record, reliable payment system and so on. (Bhattacherjee, 2002)
In sum, indicated as the measurement of online trust building in many researches, trustee’s ability, benevolence, and integrity are associated with website design such as product presentation, attractiveness and usability, service quality, say delivery and payment system, and credibility (Bhattacherjee, 2002; Doney and Cannon, 1997). In other words, website design, credibility and service quality could contribute to purchase intention through ongoing trust building, and in the next section, a conceptual framework is built to testify it.
4.5 Conceptual Framework
According to the studies on consumers’ relationship with companies (Bhattacharya and Sen, 2003), trust and online purchase intention (Schlosser et al., 2006), the key determinants of online satisfaction and the impact on the following behaviour (Zeng et al., 2009), the role of trust in online business (Lim et al., 2008) and online product presentation’s influence on people’s purchase intention (Park et al., 2005), we develop a conceptual framework about the key determinants that impact ongoing trust building, combining the practical situation of EA with previous studies on online shoes consuming characteristics. This study divides the contributors to ongoing trust building into three categories: (1) website design, (2) credibility and (3) service quality. The Research Model is presented below (Figure 1). It is predicted that website design, credibility and online service quality will affect consumers’ intention to purchase indirectly through ongoing trust building. What’s more, the study will discover whether the three contributors share equal weight of influence on purchase intention. In a word, we argue that if online consumers perceive high-level web design, high credibility and high-quality service, then they are more likely to trust in the online service provider, which in turn contributes to intention to purchase. The results will be able to offer the directions and guidelines for EA or future shoes business to improve their online marketing performance.
Figure 1: Research Model
4.51 Ongoing Trust Building
Crosby et al. (1990) defined trust as “a conviction when the customer develops a tacit understanding with a seller, and a seller can be relied upon to behave in such a manner that the long-term interest of the customer will be served”. Pavlou (2003) indicated that trust in e-commerce is “the belief that allows consumers to willingly become vulnerable to web retailers after having taken the retailers’ characteristics into consideration”. In the virtual world, customers can’t access enough information about the company to build the trust, which makes it more difficult to achieve trust at the beginning of a relationship than in the physical world (Wirtz and Lihotzky, 2003). Therefore, on the basis of the previous literature review, we define ongoing trust building as the continuous efforts that create and maintain a consumer’s confidence in an online service provider’s ability, benevolence, and integrity in order to achieve a lasting buyer-seller relationship (Liang and Chen, 2009; Bhattacherjee, 2002).
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Several researches have studied trust in e-business. There are different points of view about the taxonomy of trust. For instance, Kim et al. (2005) thought trust impacts buyers’ purchase intention in four dimensions: trust in technology, trust in product, trust in institution and trust in information. Plank et al. (1999) categorized trust into three types: trust in product, trust in company and trust in salesperson and developed various sales strategies for each. Moreover, Lim et al. (2008) proposed three “key trust variables specific to online automobile insurance business” which are service trust, company trust and product trust. And this viewpoint was proved by Lim et al. (2010). In our opinion, services, products and company reputation are more paramount to EA as a high-end online shoes selling SME and require more trust from consumers. Thus, we argue that service trust, company trust and product trust could be the key variables to high-end online shoes selling business and EA’s ongoing trust building should base on the three dimensions.
“For an online business, its website is the primary channel for contact and communication with its customers and it shapes the cognitive perception of the customer. That is why e-commerce companies are constantly looking for ways to improve their websites to make the interaction between the website and the customer more inviting, convenient, and ultimately conductive to purchasing their products and services. (Lim et al., 2010)” As we mentioned in the previous literature review, consumer perception to the website has an indirect effect on purchase intention via ongoing trust building. Namely, consumers’ perceptions towards website design, credibility and service quality of an online service provider are positively associated with its ongoing trust building and ultimately influence consumers’ intention to purchase.
4.52 Website Design
As the traditional shopping channel is gradually replaced by the internet, e-retailers have to rely to a great degree on the website interface, which is not only a critical medium to publicise itself and improve its reputation, but also a necessary channel to sell products and services as well as interact with web shoppers to win e-consumers’ trust (Rayport and Jaworski, 2001; Bellizzi, 2000; Hoque and Lohse, 1999; Jarvenpaa and Todd, 1996/1997; cited in Song and Zahedi, 2005). “Features”, “component”, “information” are three key components of website design (Song and Zahedi, 2005). A well-designed website can skilfully apply the three elements and attractively present valuable content in a clear-structured format with certain creative feature (Ahn et al. 2004; Konradt et al 2003), by which can increase web visitors’ interest and prolong their browsing time. The longer visitors stick to one particular website, the easier they are likely to form a positive attitude towards it, which could contribute to a trustful relationship (Mccloskey, 2003-2004).
New information technology is welcomed only when it’s useful and easy to use (Davis et al., 1989). Taylor and Todd (1995) also clarified that “compatibility” impacts people’s acceptance of technology. When people are searching or shopping online, the website’s learnability, efficiency, memorability, infrequency of errors, and other key features of web design (Nielsen, 2000), such as the ease of use of the website, the quality of information, or the effectiveness of online transaction, are very significant. They dominate consumers’ following behaviours: to stick to the website or switch to another one, to view more information or actively communicate with the company via internet (Zeng et al., 2009; Koh and Kim, 2004; cited in Lin, 2007).
In addition, attractive outlook or atmospheric stimuli in the offline shopping environment may increase consumers’ purchasing possibilities (Weinberg and Gottward, 1982; Weinberg and Gottward, 1994; cited in Wang et al., 2009). Similarly, well-designed website and skilfully application of the information technology can appeal web-visitors to stick longer to the website and have interactive communication with its staff (Heijden, 2003). And it was valued as the “reason for satisfaction and subsequent trust” (Martín and Camarero, 2007). As Anderson (1980) referred that it is very important to catch people’s eyeballs at the first time, the visual appeals would possible influence the subjective judgment about the website’s performance (Jennigns, 2000; Tractinsky et al., 2000). Approving this theory, Lindgaard and Fernandes (2006) also emphasised that “a reliable decision can be made in 50 minutes”. When consumers visit one website at the first time and the impression formed in the first 50 minutes could influence the consequent decisions.
On the other hand, for apparel shopping, consumers are quite concern about the material, the fit, the colour and the quality of the products, but it’s difficult to know when people shopping in the virtual environment. Risk perception might be one of the most important reason that restrain consumers to purchase online (McCorkle, 1990; Ernst and Young, 2001; Park et al., 2005). As a result, presenting product in an attractive and convincing way is necessary to the online apparel companies. Also, pleasant virtual shopping experience may reduce the perceived risk which associated with online purchasing behaviour (Bhatti et al., 2000; Park et al., 2005). Furthermore, as mentioned above, one of most key factors for Zappos’ success is the shoes presentation in 360 degree with plenty of pictures, which minimise the uncertainties of online shoes shopping (Zappos.com, 2009).
According to the empirical research conducted by Song and Zahedi (2005), website design can strengthen customer’s beliefs and consequently increase the tendency of purchasing online. Therefore, we assume that the website design presents a unique competitive advantage among all the e-commerce strategies and the website usability combined with novel design as well as the product presentation in a detailed and clear way lead to e-consumers’ ongoing trust building.
H1: Web Design has a positive influence on ongoing trust building.
Credibility was defined as the consumer belief that “a seller is competent, reliable, predictable, and honest, and would perform a potential transaction effectively and reliably, acknowledge explicit contracts, and fulfill the requirements of an agreement” (Pavlou, 2002). It is another important contributor to the online trust building. Credibility was also described as “believability” and a credible website means a believable website (Fogg et al., 2001).
Drawing on previous studies, credibility has been identified with two most important dimensions: trustworthiness and expertise. (Fogg et al., 2001; Corritore et al., 2003; Fogg and Tseng, 1999). Trustworthiness is characterised by the “well-intentioned, truthful, unbiased” behaviour, which requires the web-marketers to convey a “real-world” features towards its customers, that is to say, providing “physical address” and “employee photographs”, “linking to outside materials and sources” or “stating a policy on content”, to create a honest and accountable company image. Expertise can be proved by the professional knowledge or skills, sufficient experience and capability (Fogg et al., 2001). In the context of e-commence, e-retailers’ expertise and profession can be delivered to e-consumers by the demonstration of “credentials” or the proofs from a third party.
As we mentioned before, the Internet is still considered as a risk shopping channel for public. E-marketers face the challenge of reducing the risk perception of shopping online when stepping into the online market where traditional face-to-face communications are replaced by the way of face-to-screen. Particular virtual characteristics require online business to offer a convincing mechanism. Some researchers have proved that feedback mechanism can positively support online transaction, functioning as WOM in the off-line commerce context (Pavlou, 2002). Additionally, reputation is a critical element in the online world, which can help e-retailers to reduce consumers’ risk perception and lead to the improvement of online trust (Pavlou, 2002). Positive comments from the third parties (previous buyers) have been examined to increase e-retailers’ reputation and “can be a major source of information for trust building”, which in turn improve online sellers’ credibility (Doney and Cannon, 1997, cited in Pavlou, 2002; Kim et al., 2004).
Considering online feedback mechanism is a continuous two-way communication progress, it can also contribute to the “ongoing” course of online trust building. Thus, we hypothesise that a credible website with truthful and expertise features, supported by good reviews, positively affects the ongoingtrust building.
H2: Credibility has a positive influence on ongoing trust building.
4.54 Service Quality
Parasuraman (1985) defined service quality as “the relative perceptual distance between customer expectations and evaluations of service experiences and service quality” in his SERVQUAL model (Sung et al., 2009). High-quality service including regularly update web information, response customers’ enquiry immediately, easy and safe online payment system, clear return/chance/refund policies has a positive impact on website performance (Park and Kim, 2003).
Technology development has laid a sound foundation for the service evolution of e-commerce. “The increasing popularity and quality of broadband Internet access as well as advanced Web technologies have allowed online retailers to provide flexible and competitive services to their existing and potential customers. These technologies allow retailers to build their online stores and services, and effectively deploy strategies in all aspects of their operations (Lusch et al., 2007 and McCarthy and Aronson, 2000; cited in Ayanso et al., 2010).” More and more web retailers are applying advanced information technologies and creative website features to offer better service to the customers (Dabholkar et al., 2003; Moitra and Ganesh, 2005; Tarafdar and Zhang, 2005; Udo and Marquis, 2001; Viswanathan et al., 2007; Wakefield et al., 2004). These refined technology-based website functionalities such as personalisation, advanced search tools and product cataloguing are remarkably popular among online retailers (Chu et al., 2007). They couldn’t offer such high-quality online service without the technology support.
Many past researches have positively linked online service quality to e-commerce performance. Liu et al. (2001) pointed out four determinants that are significantly related to e-commerce success, which are information and service quality, system use, playfulness, and system design quality. Based on DeLone and McLean’s study (2003), Liang and Chen (2009) identified service quality as one of the three important factors of information system success. Marimon et al. (2010) examined that high levels of online service quality has a positive impact on purchasing behavior. While lots of researches testified that service quality is a key attribute of the e-commerce success, several studies argued that none of them have established an empirical link association between online service quality and the retailers’ actual sales performance (Ayanso et al., 2010; Marimon et al., 2010).
However, considering this study is a consultancy project which is reality-based, practical experience of other firms can’t be ignored. In the case of Zappos we have learned that the most critical reason for them to develop so rapidly from an unknown company is customer service, especially the 365 day return and free shipping both ways policy. The main concern when people buying shoes online is that the purchased shoes do not fit them (in size/colour) because they can’t try them on before ordering. Particularly in the case of EA, which is not famous and sells quite expensive shoes, a customer-friendly advanced delivery system helps to remove or at least reduce the concern, which is matched with the study conducted by Tan and Wu in 2004. Also, Parasuraman et al. (2005) identified fulfilment, “the extent to which the site’s promises about order delivery and product availability are fulfilled”, as the most critical dimensions of e-service quality and Boshoff split “fulfilment” into “delivery” and “reliability” and proved it to be “the strongest predictor of value perception” (Parasuraman et al., 2005, Boshoff, 2007; cited in Marimon et al., 2010). Therefore, we argue that service quality could be a stronger antecedent of online trust building due to fulfilment aspect. Furthermore, Tan and Wu (2004) referred that, especially for the wholesalers and retailers in China, the barriers to employ online promotions were “poor credibility monitoring systems both for vendors and consumers, awkward delivery systems, and lagging behind payment”. A reliable payment system is also important for EA due to the high price of its products. People start to think more when it’s a large amount of money paying to a not well-known company. Moreover, Stockdale and Standing (2006) compared the benefits and barriers which SMEs should take into account for e-business. Apart from limited resources, one of the most possible barriers for SMEs is the lack of specific e-commerce marketing experience or e-business professionals. Especially in China e-commerce is still at the initial stage and organisations are exploring e-business while doing it. That is, another important attribute is e-business professionals.
Perceived service quality significantly contributes to customer trust (Liang and Chen, 2009). Namely, the service quality of an online firm is positively linked with its ongoing trust building in three dimensions: e-business professionals, fulfilment and payment system. Accordingly, we propose that:
H3: Service Quality has a positive influence on ongoing trust building.
4.55 Intention to Purchase
We can expect that the various antecedents of online trust building – web design, credibility, service quality – have different effects on purchase intention. This expectation is based on the previous study about the behavioural consequences of customer satisfaction (Zeng et al., 2009). In the findings, five elements (fulfilment/reliability, customer service, ease of use and product/service quality) are directly/indirectly impact the customer behavioural consequence through overall satisfaction, while those behavioural consequences are practically and theoretically proved to demonstrate as loyalty to the firm, intention to purchase and repurchase, willingness to pay premium price, willingness to post positive reviews about the firm and its service, and recommendation to others (Bearden and Teel, 1983; Zeithaml et al., 1996; cited in Zeng et al., 2009).
Customer satisfaction was found to possibly contribute to trust and satisfied customers mostly have high confidence in the company and their future transaction activities (Garbarino and Johnson, 1999; Geyskens et al., 1998; Ganesan, 1994; cited in Liang and Chen, 2009). Approved by their own research, Liang and Chen (2009) suggested that trusted consumers “have more commitment and more willingness to develop a solid relationship with service providers than satisfied ones”. This finding logically supports the prediction that trust has a positive influence on the intention to purchase/re purchase.
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