Brand Trust and Online Consumer Behavior

Jose Mauro C. Hernandez, EAESP/Fundatpo Getulio Vargas
EXTENDED ABSTRACT - Although the electronic commerce based on the Internet has not yet fully demonstrated its potential, most of the analysts seem to agree that it will represent a valuable share of the total retail sales. The remarkable increase in the use of the Internet as a shopping place in the last years has been closely followed by an increasing interest in the investigation of significant behavioral differences between consumers shopping in the Internet (online shoppers) and consumers shopping in conventional stores (off-line shoppers).
[ to cite ]:
Jose Mauro C. Hernandez (2002) ,"Brand Trust and Online Consumer Behavior", in NA - Advances in Consumer Research Volume 29, eds. Susan M. Broniarczyk and Kent Nakamoto, Valdosta, GA : Association for Consumer Research, Pages: 255-256.

Advances in Consumer Research Volume 29, 2002     Pages 255-256

BRAND TRUST AND ONLINE CONSUMER BEHAVIOR

Jose Mauro C. Hernandez, EAESP/Fundatpo Getulio Vargas

EXTENDED ABSTRACT -

Although the electronic commerce based on the Internet has not yet fully demonstrated its potential, most of the analysts seem to agree that it will represent a valuable share of the total retail sales. The remarkable increase in the use of the Internet as a shopping place in the last years has been closely followed by an increasing interest in the investigation of significant behavioral differences between consumers shopping in the Internet (online shoppers) and consumers shopping in conventional stores (off-line shoppers).

In this respect, recently some managerial and academic papers have suggested that online shoppers are more price-sensitive than off-line shoppers and, as consequence, brands will be no longer able to sustain their premium prices when competing in electronic markets.

These arguments rely largely on two pillars: from the demand side, the reduction of search costs that certain Internet characteristics such as instantaneity, interactivity and computational capacity provide; from the supply side, an increase of price competition among electronic retailers resulting from lower entry and operational costs of the Internet. The combined effect of these two factors would lead to a "frictionless" market, decreasing the importance of brands in the online consumers’ decision process.

In contrast, there is evidence that electronic markets are not more efficient than conventional markets and one of the possible explanations for this finding is that consumers are somehow influenced by particular retailer characteristics, such as trust.

This paper tries to answer the following question: "How does consumers’ trust in the retailer brand and in the brands that it carries affects their price-sensitivity?" In order to accomplish this objective, the paper draws on an extensive literature to propose a framework in which trust plays a key, intermediate role between a set of antecedents (1. consumers’ attitudes toward retailer brand; 2. consumers’ attitudes toward brands that the retailer carries; and 3. retailer brand image) and price-sensitivity. In the framework also were included the moderator effects of situational factor and individual characteristics.

Besides, considering trust definitions commonly found in the literature, the paper investigates more carefully the moderator effect of the perceived risk with the purchase.

Based on the framework and on theoretical and empirical evidence, the following propositions were elaborated: P1. In electronic markets, consumers’ attitudes toward both the retailer brand and the producer brands carried by the retailer are positively associated with consumers’ trust in the retailer; P2. In electronic markets, consumers’ attitudes toward both the retailer brand and the producer brands carried by the retailer are positively associated with the consumers’ retailer brand image; P3. In electronic markets, consumers’ retailer image is positively associated with consumers’ trust in the retailer; P4. In electronic markets, consumers’ trust in the retailer is negatively associated with consumers’ price sensitivity; P5. Trust is more relevant in the decision process of online consumers in situations of high perceived risk than it is in situations of low perceived risk; P6. Electronic Retailers who also have conventional stores are more trustable than Electronic Retailers that sell exclusively in the Internet; and P7. Online consumers are less price-sensitive than off-line consumers when the perceived risk is high and more price-sensitive when the perceived risk is low.

The paper does not argue that trust in the retailer brand is just important; instead, it suggests that in some situations brand trust can be more influential on the decision process of online consumers than other brand equity elements such as awareness and perceived quality.

This research has several implications for electronic retailers. First, it reminds that brands will play in the Internet the same role as they play in conventional markets, i.e., reducing consumers’ perceived risk; second, it suggests that electronic retailers should focus more efforts in building consumer trust than on pricey TV ads or price competition; third, it emphasizes that electronic retailers should pay more attention to their brand image and to the brands they stock, since they are fundamental elements in building a retailer’s trust; fourth, it suggests that electronic retailers of low perceived risk product categories should develop different strategies according to individual preferences, emphasizing trust differentials for "scared" consumers and prices for "expert" consumers; and fifth, it recommends that electronic retailers should try somehow to materialize their brands to compete with multi-channel retailers. The Internet is one of the current most intriguing research topics and understanding differences between online and off-line consumers are key for the development of electronic commerce. Our paper attempts to contribute for this literature integrating topics so diverse as brand equity, store image, trust, consumer-brand relationship and relationship marketing and elaborating a set propositions readily testable. The article is concluded with limitations of the proposed framework and suggestions for further research.

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