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A comparative study on the external search for goods and services Carmen Pérez-Cabañero1 University of Valencia
(1) Departamento de Comercialización e Investigación de
Abstract Knowledge of consumers’ prepurchase external search behaviour is relevant in order to enable a company to design effective communication and distribution strategies adapted to consumer behaviour. In this paper external search activities are compared in relation to a recent purchase of certain goods and services with the aim of assessing behavioural differences. Among other results it has been observed that information search is more intensive when the purchase relates to goods, probably because there is not as much accessible data on services. Thus we recommend wider diffusion of information on marketing services and that companies paid more attention to human resource training given that personal marketing sources are the major source of prepurchase information for the consumer.
Mercados, Facultad de Economía, edificio dep. oriental, Av. Los naranjos, s/n, 46022 Valencia,
[email protected]
Keywords: Consumer behaviour, external information search, goods, services. JEL Code: M31.
Pérez-Cabañero, Carmen (2007). ”A comparative study on the external search for goods and services”. EsicMarket, 123, pp. 25-41.
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1. Introduction Study of the pre-purchase “information search” stage “has not received due attention” from researchers (Malhotra et al., 1999). In fact, knowledge of consumer pre purchase information search effort and address, that is, the brands and features sought, time employed, type and number of sources consulted, among other aspects, are fundamental in enabling the company to design effective communication and distribution strategies adapted to consumer behaviour (McColl-Kennedy and Fetter, 2001). In this paper, other recent recommendations are considered, concerning the study of purchase behaviour in complex decisions (Day and Montgomery, 1999), researching consumer behaviour for services (Mitra et al., 1999; McColl-Kennedy and Fetter, 2001) and scientific rigor in the methodology. In view of the above, the main aim of this essay is to offer a comparative analysis of consumer behaviour in the external search before the purchase of certain goods and services.
2. Information search Information search is the process in which the consumer seeks appropriate data to make a purchase decision. It is the second stage in the generally accepted model for consumer decision making and it contains two main tasks: internal information search and external information search. In the first task, the person remembers data stored in his memory and decides whether they are appropriate and sufficient for making a purchase decision. In the second task, the person seeks additional data from other sources (not from his memory) that is, external sources which can be personal or impersonal, related to the commercial field or not. Internal search comes before external search and is easier to use as it is low cost and requires little effort. This information is reliable and accessible at any moment although frequently it is incomplete, inaccurate and reflects a narrow perspective of the market situation (Walters and Bergiel, 1989).
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A person’s memory-storage data is acquired passively if it is gathered involuntarily and freely and actively if it comes from data derived from a previous consultation of external sources or from his own purchase or consumption experience (Bettman, 1979; Alonso et al., 1999). Internal search influences external search in two main ways: perception of differences and prior knowledge. On the one hand, if the consumer perceives many, diverse alternatives he will be motivated to seek additional data and decide which alternative is the optimum (Claxton et al, 1974; Duncan and Olshavsky, 1982), especially if that diversity concerns price (Kiel and Layton, 1981). On the other hand, the more relevant the prior product knowledge, the less external information is needed to make a decision (Srinivasan and Ratchford, 1991). In the services arena, the role played by internal search is not clear . On the one hand it is said that previous service experience is not really a useful source, at least with respect to estate agents, dry cleaning and hairdressers (Garner, 1986). Similarly, participation of the human factor in the service warrants certain variability which increases the difficulty of predicting a future service result (Booms and Nyquist, 1981). However, Murray’s (1991) results highlight the importance that consumers give to internal search before service purchase due to the high cost involved in finding the relevant information and the fact that accessible data in the proper format is not always available. The main difference between internal and external search is the type of sources consulted. As mentioned before, in the former the person collects information from his own memory while in the latter it comes from the environment, whatever the nature of the consulted source.
3. External information search External information search is the process of information detection from the environment to obtain in-depth knowledge of a brand or product category whether or not purchase is being considered (Schmidt and Spreng, 1996). The effort involved and the amount of information sought differ according to the decision type considered by the consu-
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mer, which according to Howard and Sheth’s classification (1969) can be routine, limited or extended, (the search being more intense in the extended decision). The consumer makes a longer search when seeking special or sporadic goods rather than routine ones (Alonso et al., 1999). Similarly, consumers seek more data before purchasing a service with a predominance of credence and experiential features rather than searchbased services (Mitra et al., 1999). The search for professional personalized services is more intense than for generic standard ones (Hill and Motes, 1995). There are several proposals on the dimensions of external search activities. Kiel and Layton (1981) distinguish three: brands, sources and time. In contrast, McColl-Kennedy and Fetter (1999) differentiate effort, attributes and sources of search. Hill and Motes (1995) talk about the search length including only the consulted sources and the time employed. Finally, Venkatraman and Dholakia (1997) study the amount of data sought, the sources consulted and search strategies, a similar frame is mentioned by Gómez (1997), and it is also adopted in this essay under the names of intensity, address and sequence of external search. 3.1. External search intensity External information search intensity has two basic aspects. First, the amount of information sought by the consumer from external sources and second, the time employed. Additionally, other less studied aspects are the number of visits and the number of phone calls made to different shops looking for information. In relation to the comparison of search intensity for goods and services, the literature finds some differences (Zeithaml, 1981; Bloom and Pailin, 1995), the service search being more complex due to the specific nature of services, particularly their intangibility and the consequent perceived risk (Haywood, 1989). However, lack of empirical comparative research means we cannot state in which product category the external search is more intense.
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3.2. External search address During the external search stage, the consumer has a wide set of sources to seek information on the product whose purchase is under consideration. There are many classification schemes on this issue. In an attempt to summarize previous works, Table 1 offers a proposal based on two dimensions.
Table 1. External information sources PERSONAL SOURCES
IMPERSONAL SOURCES
COMMERCIAL SOURCES
Salespeople, inside or outside the shop
Communication media Labelling Internet
NON COMMERCIAL SOURCES
Reference groups: relatives and acquaintances Observation
Objective publications by consumer associations and other public organizations
The first dimension is based on the possible link with the commercial field of a particular source. In that case, the marketing executive can control the information sent although only to a certain extent in the case of personal communications media. The second dimension refers to the personal or impersonal nature of the information sources considered. The above proposed classification frame is valid for either goods or services, given that in both cases all the mentioned sources are available. However, the use a person makes of them can be different depending on the type of information sought and the type of product category under purchase consideration. In relation to the first aspect, some authors state that a certain information source can be appropriate for searching for some particular features and not others. Thus, although advertising offers biased data on product quality, it can be convenient for searching general information and updating data about where to buy it (Fast et al., 1989). In contrast, per-
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sonal sources are particularly relevant not only when selecting a product but also when selecting a supplier and for diffusing information on new goods (Gylly et al., 1998). Similarly, it has been proved that people consult specialist professional sources to seek objective technical data whereas they consult friends and acquaintances when they want a subjective opinion (Hoyer and Jacoby, 1983). With respect to the selection of sources depending on the product sought, the literature points out that consumers prefer personal information sources when buying durable goods (Gilly et al., 1998). For sporadic purchase goods, a study focussing on electrical household appliances found that 59 per cent of buyers were informed by the salesperson in the shop (Wilkie and Dickson, 1991). Other studies on routinely purchased goods focused on the effects of advertising in the sales place but there was no research on the external search involved in those acquisitions (Murthi and Srnivasan, 1999). In the services arena, the use of personal sources is crucial (Murray, 1991), especially for high priced services and those provided by qualified professionals (Soutar and McNeil, 1995). Personal sources are more effective when they are also independent (Murray, 1991). Among the reasons justifying why consumers prefer to consult personal sources before a service purchase of particular significance is the fact that the mass media is not always capable of informing about service features which the consumer needs to feel or about the level of adaptation to certain consumer requirements and needs (Grande, 1996; Venkatraman and Dholakia, 1997). Also, it is noted that quite often, there are no impersonal information sources about a particular service provider, for instance due to its small size, limited area of influence or ethical reasons in a certain professional group (Grande, 1996; Venkatraman and Dholakia, 1997). 3.3. External search sequence This aspect is related to the sequential process of searching for information from external sources. In general, the literature indicates three basic
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strategies: searching by attribute (the attribute sought guides the consumer search), searching by brand (that is, seeking as much as possible from a brand before searching for another one) and searching by sources (in this case the source consulted determines the search process). However, the sequential process employed by consumers is an aspect which is not always considered by researchers in their empirical work because it is difficult to observe and assess.
4. Empirical research methodology 4.1. Research objective and method The main objective of this research is to obtain empirical evidence for some premises in the literature on consumer behavioural differences in their external search process before the purchase of goods or services. An in-depth study is presented on the intensity and address of the external prepurchase information search. Several goods and services were selected because greater effort on the external search was expected given their sporadic purchase, high price and durable nature. Particularly, interviewees had to remember how they gathered information before purchasing one of the following goods: a house, a car or motorbike, a vacuum cleaner dishwasher or washing machine, a tv or hi-fi set, and a personal computer. Similarly, interviewees had to remember about service acquisitions from a dentist, a lawyer or tax adviser, an academy or nursery, household repair, and a travel agency. In relation to the sampling frame, the most important characteristics of the survey are summarised in table 2.
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Table 2. Sample characteristics UNIVERSE
Inhabitants over 18, living in Valencia city (Spain)
METHOD FOR GATHERING INFORMATION
Personal structured survey
SAMPLE SIZE
300 people
CONFIDENCE LEVEL
95%; Z = 2; p = q = 0.5
SAMPLE ERROR
±0.0577
SAMPLING PROCEDURE
Random route, with prior double sampling by age and sex according to population quotas.
4.2. Hypothesis The literature review indicates greater complexity in a service purchase search; in particular because less information is available on services (Zeithaml, 1981), there is less variety of alternative services (Bateson and Hoffman, 1999) and there is a high cost involved in seeking data on credence and experience (Venkatraman and Dholakia, 1997), which predominate in services. As a result, a less intense information search is expected when related to a service acquisition. In contrast to the above position Murray (1991) concludes that a service information search is wider based on his result that consumers indicate a “relative preference to defer an outright purchase of a service” to obtain further data on it. Despite that, in a recent comparative study certain empirical evidence was obtained about a more intense external search for some goods when compared to substitutive services (Venkatraman and Dhlolakia, 1997), thus the following hypothesis is presented: Hypothesis 1: The consumer searches for more external information when his purchase is related to the proposed goods rather than the proposed services.
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Although we have not found any empirical research comparing the number of external information sources, in line with the above hypothesis of a more intense search for goods, we consider that the number of consulted sources will be higher for goods than for services, independently of their personal or impersonal nature. Consequently, the following hypothesis is presented: Hypothesis 2: The consumer consults more information sources when his purchase is related to the proposed goods rather than the proposed services.
5. Results In order to contrast the first hypothesis, the main statistical descriptives related to the proposed goods and services are shown in tables 3 and 4 respectively.
Table 3. Statistical descriptives for search intensity. Goods. GOODS Mean
St.dev.
min
max
N
1. Number of different brands sought
2.72
1.63
1
10
300
2. Number of models sought in the selected brand
1.95
1.14
1
10
300
3. Number of features sought in the selected model
3.49
2.27
1
10
300
4. Number of shops visited
2.55
1.77
0
10
300
5. Maximum number of visits made to the same shop to find information
2.11
1.32
0
10
300
6. Number of days employed in the information search
10.48
12.87
1
90
300
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Table 4. Statistical descriptives for search intensity. Services. SERVICES Mean
St.dev.
min
max
N
1. Number of different shops searched
1.68
1.05
1
6
300
2. Number of features sought in the selected service
2.17
1.45
1
12
300
3. Number of features sought in the selected shop
1.74
1.62
0
20
300
4. Number of shops visited to find information
1.14
1.05
0
6
300
5. Number of phone calls made to shops
1.61
2.39
0
20
300
6. Number of days employed in the information search
4.50
7.18
1
60
300
As Tables 3 and 4 show and, for the aggregate data in all analysed goods and services, the average number of brands and characteristics sought, number of shops visited and days employed in the information search are always remarkably higher when they are related to the search for the proposed goods. To find out whether the means obtained for each product category were statistically different, T test for related samples was applied. This test calculates the differences between the values of the variable for each case and determines whether both come from a population with the same mean. Results for the main aspects are shown in table 5.
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Table 5. T test for related samples Pair of variables
N
t
g.l.
Sig.
Nº brands sought -Nº service shops sought
300
9.88
299
0.000
Nº goods features - Nº service features
300
9.53
299
0.000
Nº goods shops visited - Nº service shops visited
300
12.70
299
0.000
Nº days on goods search - Nº days on search service
300
7.72
299
0.000
The significance associated to the coefficient from the T test indicates that, in fact, in every pair of compared variables both means are statistically different. This demonstrates that the external information search is less for services, confirming hypothesis 1. In order to test the second hypothesis, table 6 is offered which contains the results for the frequency of consulting certain information sources. To simplify the table, each activity has been numbered in the same order as they were presented to the interviewee. The meaning of each activity in table 6 is as follows: Activity 1: I bought it without looking for further information Activity 2: I bought the first one I found Activity 3: I thought about my previous experience Activity 4: I asked for a demonstration before I bought it Activity 5: I asked the opinion of the salesperson/employee Activity 6: I paid attention to newspaper and magazine advertisements Activity 7: I asked members of my family for their opinion Activity 8: I tried to remember which one my friends would choose Activity 9: I read an article comparing various brands or shops in a neutral and objective way Activity 10: I asked an acquaintance for their opinion Activity 11: I paid attention to TV advertisements Activity 12: I read information in several brochures from the producer/distributor
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Activity 13: I read a report written by an authority in that field, a specialist on those goods /services Activity 14: I asked the person in charge of the shop Activity 15: I paid attention to what other customers said about that goods item/service Activity 16: A professional from the sector recommended it to me Activity 17: I looked for it in the Yellow Pages (Telephone Directory) Activity 18: I looked for information on the Internet
Table 6. Information gathering activities. A1
A2
A3
A4
A5
A6
A7
A8
A9
Goods
0
0
133
94
272
162
225
34
107
Services
0
0
114
4
114
46
197
20
16
SUM
0
0
247
98
386
208
422
54
123
Difference
0
0
19
90
158
116
28
14
91
A 10
A 11
A 12
A 13
A 14
A 15
A 16
A 17
A 18
Goods
187
77
166
38
158
47
92
29
40
Services
175
15
63
10
200
50
47
53
21
SUM
362
92
229
48
358
97
139
82
61
Difference
12
62
103
28
-42
-3
45
-24
19
Three main aspects may be highlighted from the analysis of Table 6. First, in all the decisions related to the proposed goods and services there has been some type of external information search as none of the interviewees indicated he had bought it without looking for further information or had chosen the first one he found (A1 and A2).
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Second, the main consulted source before purchasing goods is “Ask for the opinion of the salesperson/employee” (A5 with 272 cases), whereas for services it is “I asked the person in charge of the shop” (A14 with 200 cases), both sources are personal and commercial. Finally, in the purchase of goods and services, the second and third most important activities are the same: “Asking relatives for their opinion” (A7 with 225 and 197 cases in goods and services, respectively) and, the opinion of friends or acquaintances (A10 with 187 and 175 cases in both product categories respectively). To conclude, there is a clearly higher frequency of positive answers when the activities are related to the selected goods rather than the services, which is in line with the statement of the second hypothesis and so it is accepted.
6. Discussion and managerial implications This research answers the request made by several authors for more research on consumer prepurchase information search behaviour, particularly in the field of services to remedy the lack of empirical studies. After the literature review, several hypotheses have been presented to compare the intensity and address of the prepurchase external information search, for certain proposed goods and services. The main conclusion of this study is that the external information search is wider for the proposed goods purchases than the services ones, in terms of intensity and search address. The less intensive external search made by consumers before service acquisitions may be due to the high cost of this process as a result of the limited number of alternative providers available and the lack of information about them (advertising is considered contrary to their ethics in some service sectors). At the same time, the differential nature of services, especially their intangibility and heterogeneity, makes it more difficult to gather reliable information about them before acquisition, which means that any possible benefit from the search could be underestimated. Due to the
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high cost and limited benefits perceived from a possible external search, the consumer seeks less before service purchases, especially if they come from qualified professionals as do those proposed in this research. In order to reduce the disadvantages mentioned above, information about the service and the company providing it should be disseminated, informing and offering arguments to increase consumer trust concerning the service result. These arguments should refer to subjective customer service experience rather than the technical or objective dimensions of the offer (Murray, 1991). Additionally, study of the search address in this research suggests a basic recommendation for all organizations, whatever the products they sell, goods or services: to improve human resources management, especially in terms of selection, training and motivation of customer contact personnel. This is because the information offered by those employees influence the consumer purchase decision. Also, given the decisive role that consumers attribute to asking relatives, friends and acquaintances for their opinion, it should be vital to apply some policies to develop customer satisfaction and consequent fidelity, as well as activities related to word-of-mouth communication in the organization planning process (Beltramini, 1989), for instance finding out and employing opinion leaders as spokespeople for those policies. Lastly we need to point out as a limitation the scope of the present research. Particularly, the selection of the proposed goods and services for which the consumer had to remember his search behaviour is an unavoidable limitation which has to be assumed. The use of new samples, including more complex sample units such as families or organizations, and proposing different goods and services for analysis could be further interesting lines of research.
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