Videotex and Consumer Behavior

ABSTRACT - Videotex, as a new communications medium, could have significant impact on the ways in which consumers receive and process information and make decisions. Consumer behaviorists should understand the potential of videotex so that current theories and models can be used or modified as appropriate.

Citation:

W. Wayne Talarzyk, Robert E. Widing, and Joel E. Urbany (1984) ,"Videotex and Consumer Behavior", in NA - Advances in Consumer Research Volume 11, eds. Thomas C. Kinnear, Provo, UT : Association for Consumer Research, Pages: 509-513.

Advances in Consumer Research Volume 11, 1984      Pages 509-513

VIDEOTEX AND CONSUMER BEHAVIOR

W. Wayne Talarzyk, The Ohio State University

Robert E. Widing, The Ohio State University

Joel E. Urbany, The Ohio State University

[This paper is an adaption from several Ohio State University working papers by the authors on the topic of videotex.]

ABSTRACT -

Videotex, as a new communications medium, could have significant impact on the ways in which consumers receive and process information and make decisions. Consumer behaviorists should understand the potential of videotex so that current theories and models can be used or modified as appropriate.

INTRODUCTION

In recent years there has been a growing awareness of and interest in systems designed to deliver text, graphics and other services to consumers using television or other video devices for display. This paper is designed to provide an initiatory review of this developing industry called videotex with specific emphasis on issues it raises for the field of consumer behavior.

If videotex is widely adapted as a new communication medium it could significantly modify the ways in which consumers receive and process information and make decisions. Such changes could have impact on existing theories and models of consumer behavior. At this time, it is somewhat premature to draw specific conclusions as to how behavior might change. Instead, the focus should be on identifying, understanding, and studying the issues involved so that current theories and models of consumer behavior can be modified as appropriate.

Toward that end, this paper is organized into four major sections. The first, provides an introductory overview of videotex and some existing applications and projects. A second section will focus on selected consumer environmental trends which may impact the adoption and diffusion of videotex. The third part will examine some of what is known about the market for videotex today including descriptions of current and expected early adopters of such systems. This will lead to the fourth section which will address some of the potential impact of videotex on consumer behavior.

DESCRIPTION OF VIDEOTEX

Videotex can be described as the generic term for a developing, interactive medium that delivers text and visual information directly to consumers (Talarzyk and Widing 1982). It can be used to reach either mass or tightly targeted audiences in both home and business markets. The user interacts with the system via a handheld keypad, pushbutton console, or keyboard. Desired information is retrieved by user command from one or more public/private bases through telephone lines, cable or broadcast signals, with text or graphics displayed on a television screen or other video device. Viewed as the product of a marriage between computer and communications technology, videotex can be aptly described as a time and space system.

Terminology

Within the U.S. and Britain, videotex was initially accepted as the generic term encompassing both viewdata and teletext. However, outside of the U.S. and Britain and increasingly in these countries too, viewdata is being used interchangeably with the term videotex. In such cases, the term videotext (videotex with a t added) is often used as the generic term, or no encompassing term is used at all. The definition gap is only of concern insofar as it creates confusion. The problem simply reflects the infancy of the field and should resolve itself as the industry matures.

Viewdata describes two-way, fully interactive systems capable of giving the user access to virtually an unlimited number of pages of information (text and graphics) and a wide array of services. To have such a system, hard wiring from the consumer's home to the system operator's data base(s) is required. Viewdata systems, therefore, use interactive cable or telephone lines as the means of carriage. This hard wire connect also enables the system operator to monitor usage and charge the consumer for services accessed in any number of ways.

Teletext is the broadcast form of videotex and refers to either one-way, non-interactive transmissions, or in its more widely viewed form, simple interactions between the user and broadcast pages. Teletext can be broadcast over virtually any broadcast medium including television signals, FM radio frequencies, microwave and satellite transmissions, and through cable television. Because of the broadcast nature of teletext, the user can only receive what the broadcaster sends, or at best, respond to a limited set of alternatives which the broadcaster transmits. In addition, because of the lack of a hard wire connection, teletext users generally cannot be charged for receiving individual transmissions (except through a flat service charge), nor can they receive any services other than pages of information. For additional information on terminology see (Sigel 1980 and Sigel 1982).

Applications

In the late 1960's, Doody and Davidson (1967) described the next revolution in retailing as involving consumers taking care of routine shopping activities via a remote computer keypad in the comfort of their own homes. McNair and May (1978) expanded on these ideas in a more recent article. Today, via the technology of videotex, the kinds of scenarios described in those and other writings are now possible. Retailing, however, is only one of the many areas in which videotex will find applications.

Tydeman (1982) discusses five categories of application: (1) information retrieval including electronic publishing, library and reference service, community services, education and advertising, (2) transactions including electronic checkbook, funds transfer, credit cards, and catalogs, (3) messaging including electronic mail, conferencing and marketing research, (4) computing including home computer service and inventory/stock control and (5) telemonitoring including home security, health and safety monitoring systems and energy management.

Projects

The first two videotex projects in the United States, Channel 2000 and Viewtron, started in the fall of 1980. The Channel 2000 project, conducted in Columbus and sponsored by OCLC, Inc. (On-Line-Computer Library Center) and Bank One of Columbus, delivered an electronic encyclopedia,electronic card catalog, public information, children's reading and math exercises, and home banking and bill paying services to 176 test homes via telephone lines.

Viewtron, a joint project of Knight-Ridder Publishing and AT&T, offered Coral Gables, Florida test homes services from a number of national and local information providers and advertisers. An array of information resources, national and local retailing, in-home banking and bill paying, learning aids, and consumer advice were among the services made available by information providers and advertisers in the first two phases of the project. The third phase, involving over 5000 participants, began in early October, 1983. Viewtron has announced plans to develop videotex services in other cities working with local organizations and investors.

Two other major regional videotex projects include (l) Times-Mirror in Costa Mesa, California, providing a collection of services called "Gateway" and (2) CBS and AT&T in Ridgewood, New Jersey providing 200 "upscale' participants a variety of information and transactional services. A host of other projects are in various stages of development throughout the U.S.

In addition to the local videotex systems being tested and developed, three national videotex services can be accessed today by personal computer via telephone lines. These systems are:

CompuServe. This organization is owned by H&R Block and is located in Columbus, Ohio. CompuServe has over 50,000 subscribers nationwide, and provides those subscribers with news information, home banking (if subscribers have accounts with cooperating banks), home-shopping (through Compu-U-Store to be discussed later), in addition to a variety of personal computing and informational services.

The Source. The Source was the first nationwide videotex system and is currently owned by Readers' Digest. The Source has over 30,000 subscribers and offers nearly 800 services from over 40 different data bases. Most popular among the services offered by The Source are Source Mail, UPI News, and The that (electronic messaging).

Dow Jones News/Retrieval. Dow Jones is an ongoing videotex service with over 60,000 subscribers across the country. The focus of this service is business information, as Dow Jones draws heavily on information from business journals (i.e., The Wall Street Journal, Barrons). Further, Dow Jones provides such services as historical perspectives on various stocks for investments.

All three of these systems carry Comp-U-Store, a national at-home shopping service, which provides over 60,000 items at prices generally 10-40 percent below suggested retail. The service can be used for obtaining product information (i.e., "browsing"), bidding on auctioned items ("Comp-U-Stakes"), and ordering items. For additional information on videotex projects throughout North America see (Talarzyk and Widing 1982 and Widing and Talarzyk 1983).

Environmental Trends

While numerous projects are being implemented and some systems are in actual operation, the overriding question is whether or not the consumer marketplace is really ready for videotex. This section will briefly review some of the major environmental trends which could lead to initial adoption of videotex systems.

Rising Costs

Rising costs in many affected industries may serve to give a boost to videotex. For example, within the banking industry it is estimated that the true cost of check processing ranges from $1.00 to $1.50. This and other traditionally low cost banking services are expected to increase in price due to the labor intensive nature of such activities. Similarly, other industries such as publishing and retailing are experiencing squeezed profit margins due to rising energy, raw material, labor, building expenses and new forms of competition. By electronically providing information, retail catalogs, bill paying, and other services, prices to consumers may be able to be kept lower.

Demographic and Life Style Trends

Two income families, single parent families, and later marriages (more single adults): These trends reflect a time poor consumer who would directly benefit from the convenience and time saving characteristics the emerging technologies offer.

Increased emphasis on "own time": The value consumers place on personal time is increasing. Activities which are "less than fun" are ideally suited to be substituted for by videotex. In-home banking and shopping would be directly affected by this dimension.

Life simplification/instant gratification: Many consumers today want things now, with little or no inconvenience. These consumers are well suited to the videotex characteristic of providing a response immediately and on demand. In addition, needs of consumers desiring self-tailored life styles and an increased amount of control over their lives can be satisfied through the video :ex option.

Growing computer consciousness: From grade-school children through middle-aged office workers exposure to information processing equipment and computer technology is growing. While a portion of society views computers with fear and distrust. this number is decreasing.

Energy price and availability: Videotex, to a significant degree, can substitute for consumer travel. The substitution of telecommunications for time, energy and travel is viewed positively from both economic and national security perspectives.

Growing information appetites and overloads: Videotex offers comprehensive information from many sources, organized and edited to the viewer's needs. If properly packaged, consumers will receive not only the information they want. when they want it, but only as much as they want.

Rising crime and security concerns: Lower cost alarm systems made possible by videotex systems can provide burglar, fire, and medical protection to the mass market. Public opinion polls frequently cite the increasing crime rate as one of today's major concerns.

Need for low cost and effective messaging capabilities: Electronic mail, bill paying, and other information services can circumvent the mail system and should prove to be an increasingly attractive alternative to the post office.

Life-long educational process: Non-traditional students may continue their formal and informal education through text and tele-courses, without the time and inconvenience problems associated with going back to campus.

CONSUMER CHARACTERISTICS

From the previous discussion it seems that the consumer environment is favorable for the development of viteotex. On a very basic level, however, videotex will be accepted by consumers only when the value of the services and conveniences it provides is greater than or commensurate with alternatives available both in terms of charges for and the time involved in using it.

Stuart (1982) discusses three ways in which consumers may find value through videotex:

1. Information-consumers could use videotex for store, department, and item selection decisions. Consumers could know when various stores are having sales, as well as keeping up to date on fluctuations in the prices of products. A very important use of videotex is expected to be the collection of price information about competing Products.

2. Education-videotex could allow consumers to keep informed on the latest fashions and trends. In addition consumers could learn about products they are considering in terms of product information and attributes.

3. Transactions-initially, transactional capabilities may be used only by those who truly need them (i.e., the elderly, the disabled). However, videotex holds much promise in being able to free up time for time-constrained people. Many have discussed the importance of time as a "consumption" good, and videotex provides an outlet for the "purchase" of extra time through providing time-saving in certain purchase situations.

Current Consumers

Two years ago subscribers to the viteotex information utilities could best be described as computer hobbyists. The majority used data processing equipment on the job (66%) and often used videotex for data storage, personal computer enhancement, and as a communication vehicle to other computer buffs, major computer manufacturers, and so on. The Source now reports that only 40 percent of its current subscriber base works in computer related areas.

The Source also indicated that the average age of its subscriber is 42 years oldC3 years older than in 1981--with 64 percent over 35. Average income is $59,000; most users are professionals/ businesspeople; most are college graduates; and the vast majority (90%) are male. In terms of usage, 20 percent of the subscriber base accesses The Source most often at work. Some 53 percent spent at least half of their access time for primary or secondary occupation purposes.

CompuServe has experienced similar trends in their subscriber base. Newer subscribers tend to be slightly younger, a bit less "upscale" in terms of income, more likely to be female than before, have children who are increasingly using the service, and tend to have occupations which are less technical. The trend towards less of a computer hobbyist profile suggests that subscribers are using videotex services not for the technology itself but for the problems it can solve.

Future Consumer Markets

Virtually all of the videotex experiments and businesses indicate that the next wave of adopters will be "up-scale, with higher than average incomes, job positions, and levels of education. Provided below are synthesized market profiles gathered from firms who have conducted and shared consumer surveys and test results in the industry.

Demographics.

* Age: 25 to 49

* Household Income: In excess of $35,000

* Education: College or better

* Employment: White collar

Personality and Life Style Characteristics.

* Pro technology; low resistance to change and innovation.

* Self-tailored life styles; strong emphasis on own time, tend to purchase or construct the best, strive towards self-improvement, want things now, and inward directed. . Exposure to computer/communications technology at school or work.

* High discretionary incomes; willing and able to pay a premium for convenience.

* Non-traditional family structures, large number of two income households, single parent families, and singles.

* Time Poor; time constrained and willing to pay for alternatives replacing traditional activities which are less than fun.

* Information Overload; information is important to this group, but they are increasingly finding it difficult to process and organize their information resources.

IMPACT ON CONSUMER BEHAVIOR

Videotex, as a new medium, is likely to profoundly affect marketing decisions and activities within a variety of industries especially in the ways consumers receive, process and act on marketing information. Specifically this section will examine videotex as it relates to consumer behavior involving product offerings, distribution issues, communications alternatives, and pricing strategies. Additional topics such as market segmentation and consumer research will also be reviewed.

Product

Perhaps the most dramatic potential of videotex as it relates to product offerings is in the area of "prosumerism" (Toffler 1980, p. 282). The prosumer is the consumer who can interact directly with the production process, dictating final product specification as the product is manufactured. While this possibility exists for more affluent consumers today in some industries such as automotive, furniture, and custom clothing, the major potential impact lies in the greatly enlarged scope of consumer interaction with the production process made possible by videotex systems. This will be enhanced as technological developments in the manufacturing process make small batch production more cost effective.

Product selection might be enhanced through videotex systems in that the selling organizations can keep a more complete inventory in terms of product line width and depth. This is possible by being able to stock only a few central locations around the country rather than having to provide the product offerings through a large number of more traditional retail outlets. Products ordered through videotex systems may also require less elaborate packaging in that the package will not need to serve as a communications vehicle for the product contained inside.

Distribution

The traditional manufacturer, wholesaler, retailer and consumer channel make-up will likely be modified over time by more interaction between manufacturers and consumers. The fact remains, however, that physical products must be delivered to the user. As manufacturers increasingly deal directly with the consumer, new logistics methods will arise. New opportunities should emerge for highly automated, centralized warehouses and delivery routes from regional distribution facilities.

Of course, for convenience goods and many shopping goods retail outlets will continue to be viable, but increasingly focused. Some consumers will still want to "squeeze the Charmin" and enjoy other aspects of the shopping experience. It is likely that retail stores will evolve to accommodate and capitalize on videotex applications. Increasingly, for a number of industries, retail stores may be transformed into showrooms with order placing capabilities, or stores may augment their current operations with videotex terminals. In essence, more information and consumer-computer interaction will transform many industries into truly consumer driven organizations.

Communication Alternatives

Promotional material on videotex systems will probably be more education and information based, rather than serving awareness or "selling" oriented goals. On such systems, information ranging from product specifications to independent product evaluations will be available at the touch of a button. Videochannels will enable advertisers to sell new or complex products in either prepackaged, lengthy commercials, or over live shopping channel programs which feature interactive purchasing.

Videotex, as a demand medium, requires the user to have internally generated motivations for seeking product information. The videochannels, and traditional television advertising as well, provide a vehicle to stimulate demand through awareness and selling appeals. Once the consumer's interest is heightened by the more traditional advertising channels, he or she can then refer to text based channels for additional information and reflection. When provided in concert, video and text based channels should serve to complement one another, providing both consumers and marketers with enhanced transactional capabilities and opportunities.

Pricing Strategies

More perfect information should result in more perfect competition. Industries which depend upon consumer ignorance should be most affected by the widespread adoption of videotex systems. Some consumer segments should increasingly engage in price comparison shopping which videotex systems can offer in a cost-effective manner

Price, of course, is not always the determinant factor consumers use to guide their purchases. There are any number of "value added" factors which impact on the purchasing decision. This will continue to be true despite the electronic shopping options. However, local and national price information will work to reduce price discrepancies, lead to greater pre-shopping planning, and probably result in a greater number of purchases through the in-home shopping alternative.

Market Segmentation

Videotex, being an individualized mass market medium, inherently provides the seller with the ability to measure and reach segments with unparalleled accuracy, and also enables consumers to effectively self-segment themselves. It is likely that market segmentation through videotex systems will depend less on traditional segmentation variables such as demographics, personality, and life style characteristics. Instead, these general consumer characteristics will yield to, or be used in conjunction with, more situational specific variables. These would include usage situations and benefits or attributes sought in the products. Such variables are especially useful in defining markets where audience self-segmentation occurs.

It is expected that increasing audience fragmentation and > more heterogeneous marketplace will demand that market segmentation techniques be used to more adequately satisfy consumers' wants and needs. Videotex offers marketers a means by which they can take advantage of arising opportunities created by the increasing diversity among consumers. Through videotex, marketers have a new capability to measure and reach consumers. Be it through targeting markets, or by allowing consumers to self-segment themselves, viteotex will enable marketers to better reach consumers and, hopefully, do a more effective job of meeting their needs.

Marketing Research

Videotex systems offer marketers a new medium by which to obtain information about their present consumers or potential market segments. From a secondary data perspective a variety of data can be routinely accumulated from users of videotex. Such data might include types of information accessed, media behavior, transactional analyses, and so forth. There is of course the question of how appropriate it is to use these types of data. What rights to privacy do consumers have in relation to their behavior on a videotex system? System operators and marketers will need to carefully assess the potential advantages and disadvantages in the use of such data, even in the case of aggregate statistics.

From a primary data perspective, however, it may be quite possible to actively solicit information on a voluntary basis from videotex users. It might even be advantageous to establish a type of consumer panel of videotex users to monitor their attitudes and opinions on a regular basis. The real advantage is that the videotex system becomes the vehicle by which the marketing research data are transmitted to the marketer.

As with any method of marketing research, there are distinct advantages and disadvantages associated with a videotex system for gathering data. Essentially all of the pros and cons of a consumer panel type of approach to research are applicable here. The question is whether the advantages of videotex marketing research outweigh the disadvantages. In the final analysis, the answer to this question involves the traditional trade-offs in any marketing research project: time, costs, and desired quantity and quality of data. It is anticipated that videotex systems will provide an effective way of gathering marketing research data given the relevant trade-offs.

SUMMARY

As suggested throughout this paper, trends in the consumer environment coupled with the potential benefits offered by videotex, seem to imply that the new medium will be accepted as a method of obtaining information and carrying out certain household and transactional activities. The wide collection of services that will be available over videotex systems should serve to make increasingly complex lives easier, and provide users with unparalleled control over their affairs.

In summary. one might ask the question, is videotex likely to be a revolution, an evolution, or merely an insurrection? (Talarzyk and Urbany 1983). Some forecasters have taken the extreme position and predict that videotex will "revolutionize" the way consumers gather information and transact business. To the extent that a revolution suggests a prompt mass acceptance of videotex technology by consumers, it is not likely that such will occur. Others may view videotex as simply a temporary insurrection, a fad which will run its course and fade away. The diversity of benefits which can be derived from videotex (and the positive consumer response to those benefits so far), however, suggest that the new technology will be more than a fad.

An evolution, on the other hand, suggests that the new technology will gradually come to be understood and accepted by consumers as providing a better way to perform everyday tasks. Currently, alternatives to videotex are plentiful. This implies that the acceptance of videotex will only come if and when it can demonstrate value-added in comparison to those alternatives. The acceptance and diffusion of videotex will likely be a gradual transition rather than a major discontinuity.

Current environmental trends, therefore, tend to support the natural, evolutionary progression of videotex as opposed to it being an insurrection or a revolution. As this gradual transition occurs, consumer behaviorists should be active in identifying, understanding and studying the issues and changes involved. Existing theories and models of consumer behavior may help explain and bring about transition and adoption processes involving videotex In other instances, this new medium of videotex and the resulting changes it brings to consumer behavior may necessitate appropriate modifications to present models and theories.

REFERENCES

Doody, Alton F. and Davidson, William R. (1967), "The New Revolution in Retailing," Harvard Business Review, Sept.Oct.. 4-13.

McNair, M.P. and May, L.A. (1978), "The Next Revolution of the Retailing Wheel," Harvard Business Review, Sept.-Oct., 81-91.

Sigel, Efrem (1980), Videotext, White Plains: Knowledge Industry Publications, Inc.

Sigel, Efrem (1982), The Future of Videotext, White Plains Knowledge Industry Publications, Inc.

Stuart, Bruce (1982), "Videotex Retail Strategy, a Focus on Telidon," Videotex Canada, Nov., 32-37+.

Talarzyk, W. Wayne and Widing, Robert E. II (1982), "Introduction to and Issues With Videotex: Implications for Marketing," WPS 82-16, Ohio State University.

Talarzyk, W. Wayne and Widing, Robert E. II (1982), "Viewdata Project Reviews," WPS 82-18, Ohio State University.

Talarzyk, W. Wayne and Urbany, Joel E. (1983), "Videotex and Retailing - Overview and Implications for Key Retail Groups," WPS 83-44, Ohio State University.

Toffler, Alvin (1980), The Third Wave, New York: William Monow and Company.

Tydeman, John, et al. (1982), Teletext and Videotex in the United States, New York: McGraw-Hill.

Widing, Robert E. and Talarzyk. W. Wayne (1983), "Videotex Project Reviews II," WPS 83-17, Ohio State University.

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