During the past few years, the Internet has increasingly gained in importance. It became an indispensible part of everyday life. Its use rose continually across all age groups and social strata. In the course of this development, ever more companies began to offer goods and services via the Internet. E-commerce platforms and providers arose for extremely varied ranges of services and goods and handled sales on the Internet. But after only a short while, however, it became evident that specific obstacles had to be overcome for trading on the Internet. For example, an Internet site with the range of products and services presented on it first has to be found among the enormous supply of the World Wide Web. Good places in the rankings here correlate with a high number of users. With good rankings in the field of relevant keywords and keyword combinations, it is not only the overall quantity of users and/or traffic, but above all the high proportion of relevant users, which in many cases means a high proportion of users with buying interest. All of this leads to undreamt-of intensity of competition for good rankings in Internet search machines. E-commerce competition is no longer exclusively local or regional, but has instead become global. The location of the provider has become largely irrelevant.
Another important point is that the presented range of goods and services should be found attractive from the standpoint of the user and potential buyer, in order to stimulate and positively influence a purchasing decision or a booking decision e.g. in the case of a flight or hotel booking.
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Another important precondition for an order from an online vendor is the trust that a user has in the vendor. Purchasing online involves a considerably greater risk for the buyer or booker than in traditional trading. Many customers are afraid of disclosing their personal data, especially their credit card number, to a completely unknown company and are uncertain whether the ordered goods will actually be delivered or of the promised quality and whether the actual purchasing process is trustworthy.
What parameters determine the market success of a company operating as a vendor in the field of e-commerce? Here, as in traditional trading, the customer is the top priority. The ultimate objective is to gain new customers and retain existing ones. Because the first of these represents an extremely high cost factor, especially in e-commerce, online companies should focus their actions particularly upon the latter. Comprehensive reorientation as regards marketing and distribution, as well as regarding competition strategies is here indispensible. The new medium has led to a profound change in consumer behaviour. At any time of day or night, the online customer can "surf" from vendor to vendor on the Internet. Without great effort, they can compare prices and ranges and change the vendor with a single click. Customer evaluation and price comparison portals play an ever greater role in this. These so-called meta-searchers even compete with the companies, the products of which they are evaluating and comparing, for the rankings already mentioned above. Due to various factors, their presence is often a dominant force to individual vendors.
Long-term retention of the customers by the company is of central importance for e-commerce. The question thus arises as to how customer loyalty and customer retention can be achieved in such a dynamic medium as the Internet. As in traditional trading, a central role is here played by preference formation regarding the buying decision. Satisfied customers are becoming an ever more important competitive advantage. Customers who use the vendor's own distribution channels reduce the commission and fees of intermediaries and third-party vendors and increase profit and ultimately, as a result of this, independence on the marketplace (Wang & Wang, 2010). How purchase decisions arise in e-commerce, what factors influence them and what other psychological aspects play a role in this are questions that are still largely unanswered in the research. There seems to be a need to a comprehensive scientific investigation of purchasing behaviour in e-commerce and its determinants, especially from a psychological perspective. Although very intensive discussion of the subject areas of customer satisfaction, customer loyalty and customer retention is being conducted in business research, on the basis of psychological theories, this discussion is rather neglected in the field of purchasing and decision-making psychology. The present work is intended to help remedy this deficiency.
This dissertation should support decision makers in the arena of E-Commerce and E-marketing within the hospitality industry to optimize their website in accordance with the way end users process of preference building is conducted. As such, it should be recognized that the primary objective of any customer oriented initiative should be to basically build, satisfy and retain the customer base (Kim et al, 2010). Therefore, poor understanding of the customer behavior will present difficulties in terms of customer satisfaction. Customer satisfaction is important in promoting customer loyalty. Understanding consumer is an important aspect in the hospitality industry because the products and services involved are intangible signifying that purchase decisions are highly emotional and difficult to replicate. The research will involve analysis of available literature in the field of hospitality industry.
Problem Statement
The millions of people who are online at any given time are potential customers in the online market. Therefore, in a market full of online competitors, the hospitality industry organizations should understand the tastes and preferences of the consumers in order to remain competitive in the market. The absence of face-to-face contact between the business and the customer presents a challenge in terms of winning customers’ trust as well as identifying the factors that influence their purchasing decision. Therefore, it is necessary to meet the demands of the customers in order to win their loyalty as well as retain them.
The businesses should also establish how the various factors interact in influencing the consumer purchasing intentions over the internet is very important. Therefore, the marketing mix should address the various customer tastes and preferences in order to ensure competitiveness in the industry.
Although there has been much of the research has been done in the field of customer satisfaction, customer retention and customer loyalty, little of the research has been done in the area of purchasing and decision making psychology. Therefore, the focus of the research will be to identify the factors influencing the purchasing patterns of online customers in the hospitality industry. Therefore, the paper will be an effective tool that will help the organizations in the hospitality industry to stay competitive in the market.
Research Questions
Based on the research problem, the research question has been formulated in order to fulfill the aim as well as the purpose of the research as follows:
What are the factors influencing the purchasing decisions of online customers in the hospitality industry?
The Purpose
The aim of this research is to investigate the factors that influence the online purchasing behavior of customers in the hospitality industry.
The outcome of the research will help the businesses in the hospitality industry to develop appropriate tools necessary to identify the factors affecting the purchasing behavior of online customers. It will significantly contribute to the development of appropriate strategies necessary to attract, satisfy and retain online customers.
Literature Review
The Internet
The internet has revolutionized the social, political and economic lives of people in the society over the past years. The globalization, technological developments as well as the inevitable transition to an information society has transformed the current rules of the business world. The developments in the information and communication technology have led to improvements in the usefulness of the internet as an essential business tool (Wang & Wang, 2010). Therefore, the computer and the internet have become indispensable tools for businesses and individuals. As a result, individuals have increased their presence in the online space searching for everything they want. This has presented an opportunity to businesses that engage customers in the online market to increase sales by attracting online market customers.
E-commerce
E-commerce refers to buying and selling activity over the Internet. Therefore, e-commerce has been able to facilitate commercial transactions over the internet between businesses and customers without any physical contact or exchange (Kasavana et al, 2010). The new information technologies as well as the rise in internet users have given rise to a new marketing reality. Therefore, businesses have to compete for the online market in order to increase sales. E-commerce has been recognized by businesses as a complement because it has significant influence in the performance of organizations (Jang et al, 2008). The existence of e-commerce has transformed the organization’s understanding of competition in terms of the importance of competitive power and superiority. Therefore, there has been an increasing shift among businesses towards use of e-commerce channels in communicating with customers in order to improve competitiveness.
Online Communities
Currently, customers spend most of their time on the internet seeking to make purchasing decisions. Therefore, improved technology has made the internet to be more social. This is because the consumers are able to generate content that can be shared with other consumers over the social networks. As a result, the social media has emerged as an effective online social tool that influences the buying decisions of online customers (Kasavana et al, 2010). Therefore, the hospitality industry organizations need to get involved within the online world in order to effectively reach and listen to the consumers.
Therefore, there is need for businesses in the hospitality industry to build online communities that will effectively help in attracting and retaining online customers. The online communities have significant social influence on members regarding the products of a particular business. The social benefits associated with the online community of a business may improve their loyalty to the products of the business due to the bonding that exist in the community.
The hospitality related online communities play a significant role in attracting online customers to an online business (Kim et al, 2008). This is because such communities share their experiences with members regarding the services offered by the business. Moreover, such online communities provide the business an opportunity to respond to the questions raised by potential customers. The online communities provide psychological benefits to the members that are derived from a sense of belonging to the community. Moreover, such benefits create a sense of affiliation to the business hence improving the loyalty of the customers to the hospitality industry business (Jones & Rafaeli, 2000). Furthermore, the members will be able to learn more about the products and services as well as the group norms. Such association with the online community among members ensures that they develop permanent sense of identification with the community. As such, their loyalty to the business is established.
The online community provides reviews to members and the member use the reviews to make purchasing decisions. The reviews are trusted by the consumers because they identify themselves with the group (Xie et al, 2011). This leads to increase online sales as well as improved customer loyalty. Improved customer loyalty enables the business to retain more customers (Jang et al, 2008). Online communities offer the best alternative channel to relay the reviews to potential customers because customers are aware of fake reviews from purported customers on other online platforms.
Consumers tend to believe the previous experiences of others and disregard their own information (Xie et al, 2011). This is because the rational inferences based on the decisions of others dominate the individual signals hence facilitating imitative behaviors among online consumers. Basing ones purchasing decisions on others’ experiences is perceived by potential buyers as a reduction in purchase decision risks. Moreover, the majority of other consumers influence the purchasing decision of a member regardless of whether it is positive or negative.
Improvements in Technology
The hospitality industry has been characterized by tremendous development regarding the use of technological platforms in order to improve business functionalities. The growth in technology has also seen more and more consumers in the hospitality industry using technology to access services (DeMicco, 2009). As such, majority of the hospitality industry consumers have begun to use mobile gadgets to access services such as hotel bookings from the comfort of their home. The convenience of mobile technology in terms of accessing services has promoted that use of mobile phones in accessing information regarding hotel services. The ease associated with the use of smartphones in the analysis of hospitality industry information has made it necessary for business to enhance the use of smart phones in the communication of services in hospitality industry business.
Therefore, the hospitality service providers should recognize the changing trends and develop internet based applications that can be used by current as well as potential customers to access their services from anywhere using smartphones (Wang & Wang, 2010). The internet based application can provide information regarding the services of the hospitality service provider as well as facilitate bookings in good time. Therefore, the hospitality service providers should endeavor to be technology compliant so as to meet the customer needs effectively and efficiently.
The mobile technology applications not only facilitate access to information regarding hospitality service providers but they also minimize the prices charged for the products and services because they eliminate costs associated with middlemen. Therefore, the hospitality service providers will be able to offer competitive prices as well as convenient access to the services (Chen et al, 2012). The increasing population using smart phones provides an opportunity to hospitality service providers to develop mobile friendly websites that can facilitate easy access to the services.
Analysis of Literature
The literature indicates that great opportunities are available to hospitality service providers. The social platforms occasioned by the increased use of the internet by consumers provides a perfect medium through which businesses in the hospitality industry can communicate value to customers as well as conduct sales. Therefore, developing online communities ensure that the businesses can maintain a huge online customer base that is loyal to the services of the business (Kasavana et al, 2010). The online communities are observed to have significant influence in influencing the purchasing decisions of online consumers. This is because participation in a business’s online community enables current and prospective customers to be more knowledgeable about the brand of the business. As such, the customers develop brand trust leading to improvement in customer loyalty. Brand trust has a positive influence in consumers purchasing decisions. Therefore, it is demonstrable that the purchasing patterns of online consumers are influence significantly by business online communities.
It is empirical to recognize the role played by mobile technology in improving access to hospitality services. Development of smart phone applications makes it easier for customers to access the websites of the hospitality service providers through internet-based applications (Chen et al, 2012). Because of the ease of access associated with mobile technology, the customers can easily make purchasing decisions based on the information obtained. This is because the smartphone applications allow the customers to view the features of the services offered such as room quality, hotel amenities and reviews from fellow customers based on their experience with the hotel. Therefore, hospitality service providers should consider improving their technological infrastructure in order to incorporate mobile technology in their service models.
Conclusion
In conclusion, there are many opportunities that hospitality service providers can explore to improve the experiences of their customers. The social media that has been made available by the internet should be exploited in order to come up with the necessary strategies to influence the purchasing decisions of the online consumers (Kim et al, 2008). Business online communities are effective because potential customers rely heavily on the experiences and choices of the majority. Therefore, online communities can influence the customers positively leading to improved customer retention. Moreover, mobile technology is emerging as an effective tool that can be utilized by hospitality service providers to facilitate mobility and access to their services. Mobile applications not only reduce the costs but also enhance convenience. Therefore, hospitality service providers should incorporate mobile technology in their offers in order to increase the number of customers patronizing their services. This is important because a significant proportion of the population uses smartphones. Therefore, mobile applications provide a perfect medium through which a huge market can be reached. Therefore, online communities and mobile applications are essential components that can facilitate hospitality business online campaigns.
References
Chen, R., Cheung, C., & Law, R. (2012). “A review of literature on culture in hotel management research: what is the future”, International Journal of Hospitality Management , 31; 52-65
DeMicco, F. (2009). “The Microsoft home: applications for the lodging and restaurant industry today and in the future”, Journal of Food Service Business Research , 12(1); 95-106
Wang, H. & Wang, S. (2010). “Predicting mobile hotel reservation adoption: insight from a perceived value standpoint”, International Journal of Hospitality Management , 29; 598-608
Xie, H., Mtao, L., Kuo, P., & Lee, P. (2011). “Consumers responses to ambivalent online hotel reviews: The role of perceived source credibility pre-decisional disposition”, International Journal of Hospitality Management , 30; 178-183
Jang, H., Olfman, L., Ko, I., Koh, J., & Kim, K. (2008). “The Influence of online brand community characteristics on community commitment and brand loyalty”, International Journal of Electronic Commerce , 12(3); 57-80
Jones, Q., & Rafaeli, S. (2000). “Time to split virtually: discourse architecture and community building create vibrant virtual politics”, International Journal of Electronic Commerce and Business Media , 10(4); 214-223
Kasavana, M., Nusair, K., & Teodosic, K. (2010). “Online social networking: redefining the human web”, Journal of Hospitality and Tourism Technology , 1(1); 68-82
Kim, J., Choi, J., Qualls, W., & Han, K. (2008). “It takes a marketplace community to raise brand commitment: the role of online communities”, Journal of Marketing Management , 24(3); 409-431
