Bachelor Thesis
HALMSTAD
UNIVERSITY
Bachelor's Programme In International Marketing, 180
credits
The Impacts on Purchasing Processes during
a pandemic
A quantitative study how COVID-19 changed the
purchasing processes
Independent paper within Corporate
economy, 15 credits
Halmstad 2021-06-08
Abstract
Throughout the years there have been many pandemics, but none with the same impact and
complications of which COVID-19 brought the world at the start of 2020. Previous research on behalf of this issue has been made but not with the specifics of what the authors want to accomplish with this research. The authors want to look at “How has COVID-19 impacted the purchasing process?”. The reasoning behind choosing this research question comes from the problems COVID-19 brought the world when it came to consumerism. In other words, the purpose was to evaluate how consumers have adapted and changed their ways of making purchases. People got forced, from being in
lockdown, to do most/all their shopping through the internet, and for some this was not an easy task. Certain issues were brought to attention with this in mind: Consumers stopped their sporadic
purchases and only focused on what was only necessary, at the start of the pandemic consumers started to panic and stocked up on food and household supplies such as toiletries. This research delimits itself from two specific parts: the first one is that the authors wanted to only look at the consumer's perspective and not the retailers. Secondly the issue at hand is a worldwide phenomenon which is considered through the research but with the limitation of having Swedish consumers answering the survey that was sent out to gather information. Marketing philosophy encountered the greatest game changer in our time and foundations of concepts, theories and processes were changed. How the growth of online shopping has increased between chosen groups with the drastic changes within the purchasing processes. From 265 respondents to our survey we analyzed four hypotheses and evaluated how the purchasing process has been affected. We found that consumers agreed with our beliefs that the process has changed. Online shopping has increased since COVID-19 started, but not within a significant change between groups. Consumers were not comfortable purchasing
expensive items online which resulted in a problem regarding COVID-19 restrictions.
Keywords
Purchasing process, Online shopping, COVID-19, Pandemic, Consumer behavior, Buying behavior, Purchasing changes
Handledare: Christine Tidåsen
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Innehåll
1. Introduction ... 4 1.1 Background ... 4 1.1.1 History of purchasing ... 4 1.1.2 Integration of COVID-19 ... 5 1.1.3 Consumer Behaviour ... 6 1.2 Problem ... 8 1.3 Purpose ... 9 1.4 Definitions ... 9 1.5 Delimitations ... 9 2. Frame of reference ... 10 2.1 Purchasing process ... 102.2 Decision making process ... 11
2.2.1 Decision making process to expensive items. ... 13
2.3 Buying behavior ... 14
2.4 Economic Factors ... 15
2.4.1 World economy ... 15
2.4.2 Consumers Economy ... 15
3 Method ... 18
3.1 Research philosophy & Approach ... 18
3.2 Quantitative research... 18
3.3 Literature review ... 19
3.4 Data collection ... 19
3.4.1 The Survey ... 19
3.5 Validity and reliability ... 20
3.6 Ethics ... 20 4.0 Empirical data ... 21 4.1 Questions ... 21 4.2 Statements ... 23 4.3 Comparison charts ... 25 4.3.1 Analysis question 5 ... 25
4.3.2 Analysis question 3 & 4 ... 25
5.0 Analysis ... 26
5.1 Purchasing process in the eyes of respondents ... 26
3 5.3 Online vs. In store ... 27 5.4 Further analysis ... 28 6.0 Conclusion ... 30 7.0 Further Studies ... 31 References: ... 32 Appendix ... 38
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1. Introduction
The first chapter of this study provides a general introduction to the research topic. The background and problem are presented, to create an understanding for the relevancy of why this study is being made. Followed by the purpose and the research question that aims to be explored throughout the research by the authors.
1.1 Background
1.1.1 History of purchasing
One of the most basic processes common to all organizations is the process of purchasing. It is the process of acquiring goods, and services from another organization in a legal and ethical manner. Over the time the role of the purchaser and the purchasing department has changed significantly. (Tate, 2013). The author Philip Kotler´s (1967,1972,1976) very popular and one of the most frequently used marketing textbooks: Marketing Management: Analysis, Planning and Control chapter on producers, resellers and government markets sets the tone for the agenda on business marketing. Purchasing started with the emphasis on marketing philosophy where the product concept was very dominant during the 1850-1915, followed by the era of the selling concept (1916-1960) and the new concept of marketing after the 1960s.
It is generally agreed that purchasing has evolved from a clerical buying activity into a strategic business function that makes significant contributions to the competitive position of companies (Ellram & Carr, 1994; Carter & Narasimhan, 1996; Gelderman & Van Weele, 2005). At the start, purchasing's role in strategy was reactive rather than proactive. Because of this, the movement of the purchasing function from “passive” or reactive role to a strategic role is a widely discussed aspect of purchasing strategy (Ellram & Carr, 1994). Getting the products to the customers at the right time, place, cost and quality constitutes an entirely new type of challenge. With the addition of technology and an improved logistics network, have opened a world of opportunity to better enable competition through an expanded, globally oriented network of suppliers (Tate, 2013).
A consumer is a person that identifies a need or a desire, makes a purchase and then disposes of the product in the consumption process. A typical consumer is dependent on the consumption of
industrial goods, services, housing and wealth (Grundey, 2009). Consumer behaviour is an important and constant decision-making process of searching, purchasing, using, evaluating, and disposing of products and services (Valaskova et al., 2015).
5 The following table will show the history behind purchasing, from the year 1890-2000 (Tate, 2013).
Period Status
Late 1890s Purchasing is rarely used as a different department except in the railroad.
Early 1900s Purchasing considered clerical work.
World War I and II
Purchasing function increased in importance due to the importance of obtaining raw materials, services, and supplies to keep the mines and factories running.
1950s and 1960s
Continued to gain stature, processes more refined, and more trained professionals. Still considered order placing clerical in a staff-support position.
Late 1960s- Early 1970s
Integrated materials systems were introduced, materials became part of strategic planning, and the importance of department increased.
1970s Oil embargo and shortages of basic raw materials turned the focus of the business world to purchasing.
1980s Advent of just-in-time with an emphasis on inventory control and supplier quality, quantity, timing, and dependability made purchasing a cornerstone of competitive advantage.
Early 1990s Value proposition of purchasing continued to increase: cost-savings became the buzzword.
Late 1990s Purchasing evolved into strategic sourcing, contracts were more long term, and supplier relationship building and supplier relationship management started.
2000s Purchasing shifted its myopic focus on cost to much broader terms. Some of the widely used developments: spend analysis, low-cost country sourcing, procurement technology evolved (ERP, e-sourcing), procurement outsourcing evolved (P2P), total cost of ownership, data mining and benchmarking, and lean purchasing.
1.1.2 Integration of COVID-19
The start of 2019 a new virus emerged from Wuhan, China. The virus known as COVID-19, spread rapidly around the globe. To counteract the expansion of this virus, schools, local shops and other “open to the public” establishments had to close. This made it so that the normality that was before got extinct. In order to make purchases, people had to take to the internet, and this was an abnormality for a lot of people around the globe. The pandemic outbreak and its following consequences have led to changes in consumer behaviour and the purchasing process, as indicated by a Nielsen investigation (Nielsen, 2020).
Throughout recent world history, there have been several epidemic outbreaks such as: Ebola, SARS,
MERS, Swine flu, and dengue fever (Balinska & Rizzo, 2009). These previous outbreaks have had an
6 mitigation behaviour (LA Torre, 2019). Because of these outbreaks, severe macroeconomic
implications also followed causing unemployment, uncertainty and an economic recession. During this pandemic unusual retail consumer behaviour such as hoarding toilet paper and food, was reported all over the world during March 2020 when the virus COVID-19 escalated into a pandemic (Miri et al., 2020; Wang et al., 2020). When comparing to last year’s sales, within the first couple of weeks from the announcement of the virus, the sale of milk and cream powder increased by +159.5%, followed by pasta +159% and flour by +124.4% (Nielsen 2020). Previous research on behaviour during outbreaks and pandemics linked behavioral change as an outcome of individual-level motivations and government-enforced policies (Wen et al., 2005). The greater the novelty,
unpredictability, and ambiguity, the safer the actions individuals take (Brug et al., 2009). Because of this, information sources have played a major role in consumer behaviour during the COVID-19 pandemic (Laato et al., 2020).
The continuously updating and news cycle regarding COVID-19 generates an overload of information which can be hard to interpret, especially when there is no known future. All the information has shown negative effects of people's wellbeing (Stainback et al., 2020). The upside to the pandemic has been people's motivation to “do-it-yourself”. In a study made by Kirk & Rifkin (2020), the US respondents admitted to using their own kitchen more than the last fifty years. Other activities such as taking care of the garden, baking and playing family games have increased. The respondents also make their own face masks because of the lack of utilitarian supplies from retailers.
With this information, the study needs to understand the role of information in consumer behaviour during unprecedented situations on a global scale. Taking into consideration that factories halt in production and disrupt supply chains. Although previous research has been conducted on local catastrophes and previous epidemics, a pandemic with the economic impact and magnitude that is COVID-19 has not happened in over a century. Furthermore, previous literature and studies did not examine thoroughly how online information sources affect behavioral change during a pandemic.
1.1.3 Consumer Behaviour
The consumer behaviour is the study of consumers and the processes that they use in a day to day basis to choose, consume, and dispose of products and services, including consumers emotional, mental and behavioral responses (Radu 2019). The reason behind why consumer behaviour is
important is so that the marketers can understand what influences the consumers at their core, to make the active choice into making a buying decision. By understanding just how much time and effort a consumer puts behind making this choice can make the manufacturer understand how to fill the gap in the marketplace and identify just what products that are needed and also what products that are obsolete, Radu (2019).
Radu (2019), Explains that at the core of this particular subject there lies three categories of factors that will influence a consumer’s behaviour into saying “yes”:
1. Personal factors: An individual’s interest and opinion that can be influenced by
demographics (age, gender, culture, etc.)
2. Psychological factors: An individual’s response to a marketing message will depend on their
7 3. Social factors: Family, friends, education level, social media, income, they all influence
consumers behaviour.
He then goes on to explain that there are four main types of consumer behaviour; Complex buying
behaviour, Dissonance-reducing buying behaviour, Habitual buying behaviour and Variety seeking behaviour These 4 steps shortly describe the different areas of which a consumer can go under, after a
marketing company has decided what category their target audience falls under they then will have to refer to the 3 categories of making a consumer agreeing (saying yes) to what they are intending to sell to that consumer.
Sheth (2020), describes that there is a universal law when it comes to consumer behaviour. This being when an existing habit or a necessity is given up, it always comes back as a recreation or a type of hobby. He continues to state that it will be interesting in what existing habits will stay and what habits will change over time because of COVID-19. One example of this is as previously mentioned, golf. The sport was a big interest within a lot of people throughout the world, but when COVID-19 hit the interest in the sport rise to an all-time high, with old players returning to play simply because it is a COVID-19 safe sport. Going forward we will have modified habits and new habits when it comes to consumer behaviour. People will obviously continue to purchase food items for their families, but it will become a more e-commerce way of living in the end. This being an example of what a modified habit could look like, an example of a new habit could be the procedure of always using antibacterial gels on our hands after shopping and making sure to wear masks when we leave our homes.
Figure 1: Change in shopping mindset since COVID-19 (Zhang, 2020).
Figure 1 describes how people around the world made a shift to more “mindful shopping” by
focusing on what exactly is more necessary and what is referred to as non-essentials. Here we see that consumers around the globe spend more time on focusing on finding the best prices on normal items and becoming more mindful about where they decide to spend their savings, seeing as a lot of people lost their jobs when COVID-19 first hit. Throughout the world shops were being closed since people were forced to stay at home. The people that got the worst of the bunch were the smaller industries and so called “mom and pop shops”, which basically is a family owned restaurant, food chain, or even a hairstylist. The more “social” places such as bars and restaurants also took a very big hit from
8 COVID-19 due to the fact that the population were asked to socially distance themselves from each other, and what that means is that the restaurants and bars basically lose up to 50% of what their location is capable to house (Zhang, 2020).
1.2 Problem
COVID-19’s impact on the marketing philosophy is potentially one of the greatest game changers of our time. The pandemic affected consumers ethics, marketing fundamentals and the corporate social responsibility, CSR (He & Harris, 2020). At the early stages of the pandemic, news around the world reported the repercussions of the pandemic widely known as “panic buying”. This was towards products as household commodities and especially toilet paper (Sudzina, 2021). Tam (2020),
conducted a research amongst the Canadian community and went to the conclusion that one-stop-shop retailers that are situated online. will see success during this time as 24% of the Canadian people plan to shop at bigger retailers like Costco and Walmart, and 18% of Canadians plan to only make their purchases through online marketplaces such as Amazon, a company that will continue to be on the cutting edge when it comes to the online delivery category. Conclusion, overall 56% of consumers prefer to spend less and are only buying what they need given the current life situation. What we have seen since the start of the pandemic is a shift in where consumers are spending their earnings, with a dramatic focus towards e-commerce. Colliander (2020), explains that the consumer behaviour and demand has changed drastically. Changes that have been made depend on consumer psychology and is something that we have seen in previous pandemics, natural disasters and other similar events. He also goes on to say that customers and more depending, feel an increased uncertainty and have a sense of losing control, this in return giving them a feeling of not making unnecessary purchases.
Tam (2020) talks about the importance of brand loyalty seeing as consumers will rather purchase their products from less familiar retailers than wait for their known retailer to have what the customer is looking for back in stock. He also tells us that it is predicted that the consumers will be slow to go back to the in real life stores and the online marketplace will continue to be the biggest and easiest choice for most customers. Generally speaking, the research on online luxury consumerism is still at a rudimentary stage. There have been many marketing research papers conducted either on luxury shopping behavior in the non-online context or on online purchasing behavior of non-luxury goods buyers. (Donthu & Garcia,1999). Wiederhold (2021), tells us that online shopping is highly praised for being more convenient than in-person shopping, allowing consumers to compare shops, take their time and choose from seemingly unlimited options, by doing all of this from within their comfort of their own homes. One of the biggest downsides to online shopping is the lack of the “real-world experience” and the ability to touch and feel a product to verify its quality before making the
purchase. Most people think of online shopping when they hear the term “Virtual Consumerism”, and it's a very large part of what runs the digital economy. Colliander (2020), states that consumers tend to change their purchasing patterns when big life altering changes happen and the brands that they choose within every new category are the ones that the consumer will continue with. This then creates a massive opportunity for companies seeing as a lot of consumers will be testing new products during this pandemic.
The authors found, to the best of their knowledge, that no current research fully explores this subject. There has been prior research done about this subject, although not enough with regards to the massive impact COVID-19 has had on the consumer market, which is where the research gap is
9 found. The potential changes in both consumer behaviour and purchasing process during crisis, led the authors interest to explore this during the COVID-19 pandemic.
1.3 Purpose
The purpose of this research is to see how consumers have adapted with the drastic change of purchasing process since the start of COVID-19. The authors want to investigate in this study if COVID-19 has affect the ways how consumers make purchases and how online shopping have increased within certain types of groups. The research findings can inform marketing decision-makers and adapt to similar disasters in the future.
The authors will use the implementation of the following research question:
RQ: “How has COVID-19 impacted purchasing processes?”
1.4 Definitions
·
Consumer behavior: Consumer behavior is the social and psychological processes
people undergo in purchasing, handling, and removal of a specific good. Consumer behavior
is studied from different standpoints, both from a marketer’s view and from the behavioral
and social science view (Bagozzi et al., 2002).
1.5 Delimitations
This study delimits itself from the retailer’s perception with COVID-19 in mind, and thus will not include any retailers’ aspects of the issue. Seeing as this subject is a worldwide issue at the moment, the authors have taken into account purchasing process changes globally but with the limitation of having the survey answered by Swedish consumers.
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2. Frame of reference
This chapter is providing relevant theories for the subject of the study to create a knowledge
foundation. It begins with a presentation of theories and concepts associated with purchasing process and consumer behaviour, followed by the economic factors.
2.1 Purchasing process
DelVecchio (2020), explains that a better synonym for the purchasing process is the procure-to-pay (P2P) process. This synonym is more known in the business world but works the same as it does for a “regular consumer” who searches and purchases the best product to fit their desire, when it comes for their homes. The primary benefit of a formal process for purchasing is to make sure that the consumer avoids waste due to fraud, theft and other financial traps that may exist. Not only does this apply to the economic side but also apply for time, and for some people: time=money. A procurement process contains in general three stages, the three P’s:
1. Process: Here lies the list of rules that are necessary to be followed while reviewing, ordering,
obtaining and paying for services or goods.
2. People: These are the stakeholders and their specific responsibility in the procurement cycle.
They are the caretakers when it comes to initiating or authorizing every stage of a process.
3. Paper: The final P, that refers to the paperwork and documentation involved in every stage of
a procurement process flow. All of these documents are collected and stored for reference and auditing reasons, it can be any document/receipt for something as small as underwear or as big as a company, all of these are needed in the end to make sure that a person or company is not doing something illegal.
E-commerce is an effort to describe business methodologies that address the need of organizations, merchants, and consumers to cut costs while improving the quality of goods and services and increasing the speed of service delivery. By using the internet and understanding how it has blurred the line between e-commerce and traditional commerce, more businesses start and continue to integrate the internet and e-commerce related technologies into their business process leading to improved organizational performance, (Mourya & Grupta, 2015). Sreedhar (1974-2017), discusses that improving e-commerce web applications through business intelligence techniques provides emerging research on the core areas of e-commerce web applications. While highlighting the use of data mining, search engine optimization, and online marketing to advance online business, people will learn how the role of online commerce is becoming more prevalent in modern business.
A successful online shopping procedure consists of four steps:
1. Product searching
2. Products comparison and selection
3. Confirmation and payment for the product
11 In order to complete this online shopping loop, customers must have access to the internet and
complete the first three steps. Although this attracts the younger generation who can quickly reach these requirements, the senior population shows less interest in shopping online. Most of the current e-commerce websites do not fully cover the requirements of the elderly. Some have the issue of not being clear and intuitive enough. This will inevitably bring difficulties for the elderly that suffer from age-related impairments or unfamiliar with computers. (Tian et al., 2017)
eMarketers, a research firm in the US, presents data of the global market regarding online shopping sales was approximately $1.25 trillion by 2014. They state that in 2017 it had increased with 28% and a year after another 22.9% which brings an estimate value 2019 to $3.535 trillion (Li et al., 2020). The steady growth of online purchases in recent years, according to Hwang (2009), is a result of customer service, including exclusive internet deals and discounts both for products as well as shipping. To pinpoint and explain questions regarding online trust and consumers behavior, is to understand the nature, circumstances and factors of matter to the user.
To pinpoint and explain questions regarding online trust and consumers behavior, is to understand the nature, circumstances and factors of matter to the user. According to Costa (2011), because perceived risk is an antecedent of trust, when the risk is minimized trust improves when it comes to acquiring a product or service. Thus, Costa (2011) underlines the importance of vulnerability, expectations, and the individual´s control in building trust. Given the unclear future and inherent risk, it is a vital component that might improve decision-making.
2.2 Decision making process
The decision making process is a factor within the consumer behavior which the consumers process of making choices. According to Bettman (1979), the process of decision does not have a specific pattern, more like a cycle of procedures. Attention to and/or perception of the situation within a conflict may vary the way a consumer changes their decision. Danaher & Davis (2003) states that decision making online and in store varies on two factors: brand choice and price sensitivity. It relies on the information search and the purchase environment to the consumer. They argue about
consumers being more conservative towards online shopping, then regular shopping. A popular brand gains more attention and costumers on a website.
The decision is ruled by what information is given to them, how they evaluate the information and what triggers the decisions for the consumer. There are three main states of the process:
● Antecedent state ● Purchase environment ● Post-purchase process
The Antecedent state involves situational factors such as mood, time pressure and usage context. The mood of the consumer is important because if one is having a bad day, one has tendencies of not making any purchases that are not necessary for them. If the consumer has done prior research on the product they want to purchase, the pressure will be put on the retailers and live up to the expectations (Solomon, et al., 2013).
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Figure 2: Dimensions of emotional states. (Solomon, et al., 2013)
The emotional states described in figure 2 above, represents the combination of states a consumer can be in. The one who focuses on positive aspects, such as Pleasant, Exciting and Arousing, will affect the consumer if they enjoy the products and/or surrounding of the product. Both dimensions, positive and negative, are crucial to understand for a retailer.
The purchase environment is the second factor which plays a part. Customers have two different types of memories when purchasing from a store, internal and external memories. The external memory acts as a valuable information bank about environments and similar things within a store or on a webpage. The internal memory focuses on choices and decisions made by the consumer at a specific time. The information gathered from recalls and recognition is limited and cannot be processed all at once, which makes the first impression when it comes to the environment to be crucial (Iyer, 1989). The social aspect regarding online purchases is almost non existing, which some find frustrating because they need experience to decide. Certain consumers prefer stores because to fulfill their social and entertainment needs when making a purchase (Prasad & Aryasri, 2009). Gao, et al., (2012) writes about conscious and unconscious thoughts which affects decisions. “Researchers have found unconscious thought to be more unpredictable and unsystematic than conscious thought, thereby leading to poor decisions”. They also state how an unconscious thought process resulted in worse decision making when it comes to a complex task environment.
The post-purchase decision is the third and last stage when it comes to the consumer buying decision-making process. After the use of the product, the company should know the view of the customer, if they might be satisfied or dissatisfied. If a consumer is satisfied, then there is a bigger chance of retention and a larger chance that the consumer will influence other prospects to purchase the same service and/or product. When a customer retains a product then the sales of that certain product will increase and the overall aim of the company achieving their profit margin goals will become a reality. If by any chance a consumer is dissatisfied by the product then the chances for the company of achieving their profit goals will not come to fruition. Thus, if a customer's expectations are met the chances of satisfaction will be larger than if their expectations are not met (Kotler et al., 2017).
13 As consumers do not only look towards the product when purchasing, the convenience some
companies provide with support regarding service matters. Some companies provide 24 hours a day, which plays a role in the decision making (Hermes, 2000). A step further, not mentioned above, is the effects on experiences from customers self-learning. The information interpreted by a consumer, will act as the source for future purchases. The foundation depends on the outcome of how the consumer interpreted, which results could cause variation from individual to individual (Bettman, 1979).
According to Monsuwé et al., (2004), intention to shop on the internet is also affected by the other factors such as easy use of technology, product characteristics and consumer traits. Many variables influence shopping motives, where some variables have nothing to do with the purchasing behavior (Tauber, 1972).
2.2.1 Decision making process to expensive items.
In modern retail and distribution management, the internet has profoundly changed industry practices (Doherty & Ellis-Chadwick, 2006; Pentina et al., 2011). In the luxury goods industry, embracing the digital revolution has not made much progress because it is worried about losing the aura of exclusive management (Okonkwo, 2007). From 2008 to present day, the online luxury situation has changed. Luxury vendors have recognized that the internet is a much wider market and have begun to use sophisticated information technologies to improve their online footprints. This enhances brand awareness as more and more online consumers starts to accept internet purchasing (Okonkwo, 2009).
When comparing luxury shoppers to regular shoppers, the more exclusive consumers have unique purchasing motives. A buying behavior whose major role is to display wealth and power, that is the theory known as conspicuous consumption which Thorsten Veblen coined to refer to those types of consumers. “Desire to provide prominent visible evidence of their ability to afford luxury goods.” (Solomon, et al., 2016). Veblen (1899) also describes consumers’ willingness to pay a premium for prestigious products to display prominent social status. His theory about conspicuous consumption has rarely been examined critically, on the other hand it has never really been tested neither. Reasons suggest that the difficulty lies within the criterion which defines it. His comprehensive use of an evolutionary foundation and psychology appears old-fashioned, however the principal reason could rest in the reputation he had. His role as a social critic and expositor rather than as a social theorist (Campbell, 1995).
Seeing as luxury products are highly visible and flamboyant, the consumers that purchase these items do so to signal wealth (O´Cass & Frost, 2004). In addition, luxury goods are attractive to consumers because of their high qualities (Vigneron & Johnson, 1999, 2004). On the other hand, there are the conscious and nonconscious consumers when it comes to price. Yavas (2001) conducted research, where he found that attractive prices can drive sales and prompt consumers to purchase action. The more price-conscious consumers tend to spend more time comparing the products and prices, hoping in the end to find the best deal possible. Donthu & Garcia (1999) were among the first researchers when it comes to study online shopping behavior of regular consumers. They compared purchase motivations of online versus non-online shoppers and discovered that online shoppers are much more innovative and impulsive with a higher desire when it comes to seek variety and a more positive attitude towards online shopping.
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2.3 Buying behavior
Marketing consists of numerous concepts and theories. The foundations which it is built on is to understand the market in question and an understanding how to fulfill consumers needs and wants (Hundekar, et al., 2009). When a consumer generates an involvement in a product or brand, they form a relationship which could be fragile. One might say that they can’t live without the latest iPhone and have a strong need to always be up to date with the latest products, and another is fine with whichever phone they can get their hands on. Involvement helps to understand the different perspectives from consumers regarding a product or brand (Solomon, et al., 2013).
Consumers purchasing and decision making processes differ a lot from one individual to another as described in the previous chapters. The buying behavior itself varies as well but still looking at the same factors when comparing buying a toothpaste compared with a MacBook.
“Decisions that are more complex usually involve more buying participants and more buyer
deliberation” - Maria-Christina (2009).
Figure 3: Involvement scale comparing brands model (Consumer21, 2015).
Figure 3 shows how a high involvement with significant differences between brands makes a
consumer gather as much information about both products and company, example when building your computer to get the best specifications for it. Compared to low involvement and no differences between brands where products are bought by habit, example a regular toothbrush.
Solomon (2016), states that there are three factors which generate involvement.
1. Personal factors.
Includes needs, importance and values.
2. Object or stimulus factors.
Includes differentiation and communication.
3. Situational factors.
15 These factors add to the involvement of products and decisions.
An example of Solomon’s three factors is the words “We are all in this together”, which have been marketing messages from shops in this pandemic, but what do they really mean to CSR. In an article written by Sobande (2020), they question whether this is about symbolizing support and concern of people or to look good themselves which generates profit. The rhetoric style of advertising, used to generate emotional involvement, has been used for decades. “Often, such efforts are intended to humanise brands and make them relatable and attractive to different target demographics, even by (mis)using images and ideas associated with grassroots collective organising and activism” – Sobande (2020).
2.4 Economic Factors
2.4.1 World economy
The corona virus did not only affect people's health, it also had a huge effect on the economy. In a study made by Nuno Fernandes (2020) in March 2020 the average GDP (Gross domestic product) declined by -2.8% for the 30 countries they observed. They reported GDP falls as low as 10-15% in some countries. Stores had to close their businesses due to lockdowns across the globe and many of them had to close for good (Fahad et al., 2020). In a paper written by Wang, et al., (2020), they present data that shows statistics of large companies that have declared bankruptcy. A comparison between 2019 and 2020 showed an increment of nearly 200 percent in the US, which indicates divergence from these corporations during COVID-19. He & Harris (2020) states “Some may argue that the financial strains, both short-term and long term, caused by the outbreak could significantly pushed firms to pursue short-term gains, sometimes even through fraud and misconduct, and reduce long-term CSR investment, probably due to lack of slack resources and mounting pressure for survival.”
The stock market took a tremendous dive with the World Health Organization's (WHO) declaration of COVID-19 being a pandemic. Panic within traders increased and a high insecurity spread both national as well as international on the stock markets (Singh et al., 2020). On march 12, 2020, a day after WHO declared COVID-19 a global pandemic, the stock market in the US went through the greatest single-day loss in over 30 years (Stainback et al., 2020).
2.4.2 Consumers Economy
The pandemic’s effect on the world economy resulted in effects on the consumer's economy as well. The restrictions that were implemented, such as social distancing, shut down a lot of the economic activities to slow down the spread. Consumption was lost on the consumers who regularly visited more crowded places like restaurants and bars were now forbidden, which is only one of many examples. Consumers spending were slowed down as well in retail shops, food markets and malls because of the close proximity. People were recommended to make the majority of purchases online in order to not risk any close contact with others (Andersen, et al., 2020).
16 Based on these chosen theories we have evaluated and written the following hypothesis:
Hypothesis 1: Consumers have changed their purchasing ways during COVID-19
This hypothesis is supported by both chapter 2.4.2 Consumer economy, where we describe the restrictions and social distancing laws but also from our questionnaire. We wanted to see if our respondents had adapted since the outbreak. The purpose with our paper is to evaluate how COVID-19 has impacted the purchasing process. To examine this, with the current circumstances, we set our first hypothesis. This would give us a better reference to understanding how the consumers thoughts were, which we could evaluate down the road.
Based on this hypothesis 1 the following two hypotheses were created.
Hypothesis 2: Students do NOT make more purchases online than in store during COVID-19.
Hypothesis 3: The other classes tries to make more purchases online rather than in store during
COVID-19
Our argument behind these hypotheses is both from previous research about younger generations habits to online shopping, the current COVID-19 circumstances and a news article regarding
responsibilities.
In an article written by (Lissitsa & Kol, 2016) they describe the online purchasing behavior as
something natural to younger generations because of the age they were born in. An age where most of families has a computer with access to the internet. A childhood which includes such technologies and masters it by adult age compared with the older generations where such technologies did not exist. A natural step for one generation while a massive step in to the unknown for another. Similar findings have been made that e-commerce does miss certain aspects of requirements for older generation, such as clarification and lack of intuition. Inevitably this will bring difficulties when appealing to elders which are not as up to date and unfamiliar as the younger generation is with computers and
technology (Tian et al., 2017).
The COVID-19 situation, described in 1.1.2 Integration of COVID-19, with current lockdowns and worries supports hypothesis 3 because of responsibilities. A news post on Sverige’s Radio with the headline “Students need to stop partying and spread corona” which is an indication that all students do not take the same responsibility (Sveriges Radio, 2020).
Hypothesis 4: Consumers are NOT comfortable purchasing expensive items online.
This hypothesis is based on previous research from Yavas (2001) which indicates that good deals tend to make people less hesitant and then more price conscious consumers tend to do more research before making an actual purchase. When making a purchase online, described in chapter 2.2, feeling comfortable with a certain situation is a key factor to deciding. Linking this to the current restrictions which tells you not to socialize and meet new people, there’s a problem in the purchasing process.
17 Donthu & Garcia (1999) research states that online shoppers tend to be more innovative and
impulsive when shopping which results in the need of seeking variety and positive attitude. The chapter regarding conspicuous consumption was taken into consideration because we all spend our money different and have different views on what an expensive item is.
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3 Method
In this chapter, the methodology used in this thesis is presented and motivated. The method choices are based on the research subject together with the research question and the aim of the study. A quantitative research design has been used. Also described will be the research approach, literature review, the research method, validity and reliability and ethical considerations.
3.1 Research philosophy & Approach
There are three different types of scientific research methods: Deductive, abductive, and inductive. The deductive approach, the logic is that “when the premises are true, the conclusion must also be true” (Saunders et al., 2016, p. 144). The abductive approach starts off briefly in empirical findings, then later focuses heavily on existing theories and lastly returns to the empirical findings (Jacobsen et al., 2002). Finally, the inductive approach starts off from empirical data that has been collected, formed into a hypothesis, and lastly generated to a theory based on existing evidence. In this study the authors adapted an inductive methodology.
The study started with an identification of a problem and the construction of the purpose behind this study. This was done to clearly define the field of study, and to put focus on what was to be
researched (Backman,2016). Scientific research can have different purposes. A study can either be explanatory, exploratory, or descriptive depending on what the authors have chosen to study. For this study the authors have chosen a descriptive study since it is most suited when the focus of the study happens in real-time (Yin, 2014). The research finds its support in the theory, to later be compared and analyzed with the empirical data which will be collected via surveys. The survey will search for regularity and generalization possibilities in the field via three specific constructed hypotheses. The inductive approach has been chosen to be able to create as clear hypothesis as possible.
3.2 Quantitative research
Regarding the purpose of this study, the authors found it suitable to conduct a quantitative research, with an inductive research approach. Seeing as existing theories and literature does not go to the depth of the question the authors are looking to answer. Quantitative research has been chosen by the authors because it encompasses a range of methods concerned with the systematic investigation of social phenomena, by using statistical or numerical data. Items, such as height and weight, are easy to measure whilst others such as what people think, or feel are more difficult to measure. This research encompasses the entire spectrum (Watson, R 2015).
The disadvantages of quantitative research are that everything is not measurable in a quantitative manner. It has tendencies of taking a snapshot of a phenomenon: It measures variables at a specific moment in time, and disregards whether the photograph happened to catch on looking one´s best or looking unusually disarranged (Schofield, 2007). Another limitation of quantitative research is that positivism cannot account for how the social reality is shaped and maintained, or how people interpret their actions and others (Blaikie, 2007).
19 Even with these limitations, the authors reckon that a quantitative research is the best approach for this study. This because the fact that surveys often are the best options when it comes to the examination of certain individuals, attitudes and opinions, described in chapter, 3.4.1 The survey. The authors want to retain an anonymity in the collection of the primary data, this was also a reason behind the choice of using a quantitative research method. By using a qualitative method there is a slight chance of having some interviewer effects, this being something the authors are looking to avoid (Schofield, 2007).
3.3 Literature review
The literature review was mainly done via Google Scholar and Halmstad University library database combined with eBook central and Sage journals to find relevant literature within the field of study. The authors use earlier studies from within the same field, and their references. The articles that the authors searched for was found via keywords such as: Purchasing process, Consumer behavior,
E-commerce, Online shopping, COVID-19 E-E-commerce, how has COVID-19 changed consumer behaviour, How has COVID-19 changed purchasing process, Improving E-commerce.
Some of these keywords were developed from broader keywords that the authors deducted from relevant marketing literature, such as: Purchasing process, consumer behaviour, advertising.
Due to the presented facts, the authors have chosen to do the research in an inductive manner, because the subject in question is very fresh and previous studies does not cover the field of study the authors have decided to examine.
3.4 Data collection
Because the authors have chosen to do inductive research there will only be primary data used within this study. Primary data is the data which the authors have collected for the specific study and is a first-hand source.
The targeted audience will be consumers within different age groups, ranging from 15-50+. The reason the authors chose this spectrum is because the younger generation is more used to using the internet for making their purchases, which would show a difference in our empirical findings. This is also supported by previous studies discussed in Frame of reference from Tian et al. (2017) and Lissitsa & Kol, (2016).
The primary empirical data which will be collected in this study will come from online
questionnaires, which is designed and constructed based on the presented information in Frame of
reference. The primary data will be analyzed through SPSS, which has the tools to make both T-tests
and regression analysis, to get mean values, significance and correlations. This would then later be presented as empirical data and in the end will lay the foundation for the conclusion of this study.
3.4.1 The Survey
One advantage of online survey is that it takes advantage of the ability of the internet to provide access to groups and individuals who would be difficult, if not impossible, to reach through other channels (Garton, Haythornthwaite, & Wellman, 1999; Wellman, 1997). Seeing as the authors did this
20 research during a pandemic, thanks to online surveys they managed to gather a significant amount of answers to conduct the research.
A second advantage is that internet-based survey research may save time for researchers. As previously stated, online survey allow a researcher to reach thousands of people with common characteristics in a very short amount of time, despite possible being separated by great geographic distances (Bachmann & Elfrink, 1996; Garton et al., 2003; Taylor, 2000; Yun & Trumbo, 2000). Another thing to note is that online surveys may also save a lot of time by allowing the authors to collect data while they work on other tasks (Llieve, Baron, & Healy, 2002). Once the invitation to participate in a survey by emailing it to people, or distributing it through an online social media platform, researchers may collect the data while they work on other aspects of the project in hand or other projects they may have at the same time (Andrews et al., 2003).
The last and final thing to look at is cost. Paper surveys tend to be costly, even when using a relatively small sample, and the cost of a traditional large-scale survey using mailed questionnaires can be enormous. The use of online surveys circumvents this problem by eliminating the need for paper and other costs that may occur, examples of these cost may be postage, printing, and data entry (Llieve et al., 2002; Watt, 1999; Witmer et al., 1999).
3.5 Validity and reliability
Validity and reliability have to do with the study´s entire credibility. The validity refers to how valid the research is, to see if the study measures what it is intended to be measured. Reliability refers to how reliable the research is. A study with high reliability can be repeated several times and get the same result (David & Sutton, 2016).
To ensure the study´s validity and reliability the authors will perform a meticulous operationalization, to assure that the survey questions targets the field of study correctly. Furthermore, to obtain the most credible conclusions which lays the closes to reality as possible, the authors set the goal of this survey to collect 250+ answers from respondents. In this manner, the authors can be certain that the data collected, and the conclusions that is drawn from the data, is valid and based on a broad basis (David & Sutton, 2016).
3.6 Ethics
Confidentiality refers to that the researcher sees to it that no one except the research team can identify those who takes part in the study, and that the individuals’ responses are not passed along to others. To be able to respect and acknowledge the privacy protection of every person, the authors will set a requirement of consent for every individual which are taking part of the survey (David & Sutton, 2016). Before sending out the questionnaire, the authors will provide each questionnaire with information regarding research to be conducted, as well as the purpose of the study. By doing this, each person can think of the decision, whether they want to take part of the survey or not.
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4.0 Empirical data
The empirical data chapter consists of the empirical data collected from the method approach; a survey conducted from a consumer perspective.
The data is collected from 265 individual answers from our survey. The structure of the survey was built on 7 questions and 4 statements regarding or chosen theories. Some of the questions were designed to get information of how they act during COVID-19 and the statements were designed to get their perception of how they understand the purchasing process during COVID-19.
The survey was written in English because we are interested in all answers to get as many perspectives as possible.
4.1 Questions
Question 1. Age. 15-25: 45 25-35: 35 35-50: 79 50+: 106 Question 2. Occupation. Student: 55 Working: 192 Unemployed: 3 Retired: 1522
Question 3.
How often did you purchase products online BEFORE COVID-19?
More than once a week: 14 Once a week: 41
Once a month: 159 Once a year: 46 Never: 4
Question 4.
How often did you purchase products online SINCE COVID-19?
More than once a week: 29 Once a week: 78
Once a month: 138 Once a year: 19 Never: 1
Question 5.
Which age group do you think makes most purchases online rather than in store?
15-25: 62 25-35: 108 35-50: 69 50+: 12 Equal: 14
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4.2 Statements
Statement 1.
This statement was designed in order to understand, on a scale from 1-6 where 1 is not agree, how comfortable consumers are purchasing items in store.
This statement’s mean value was 5,23
Statement 2.
This statement was designed in order to understand, on a scale from 1-6 where 1 is not agree, how comfortable consumers are purchasing items online.
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Statement 3.
This statement was designed in order to understand, on a scale from 1-6 where 1 is not agree, if the respondent purchases more online then in store since COVID-19.
This statement’s mean value was 3,84
Statement 4.
This statement was designed in order to understand, on a scale from 1-6 where 1 is not agree, how consumers believe COVID-19 impacted ways to make purchases.
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4.3 Comparison charts
4.3.1 Analysis question 5
We decided to compare age and occupation to understand what our respondents look at the online purchasing behavior in question 5.
Figure 4: Occupation answers Figure 5: Age answers
The figures above are the result comparison. Figure 4 compares “occupation” with “which age group you think make most purchases online” and figure 5 compares “age group” with “which age group you think make most purchases online”. Figure 5 was designed, to make it easier on the eye, by giving the options in question 5 group names of a, b, c, d and e in that order.
4.3.2 Analysis question 3 & 4
We also decided to compare question 3 & 4 without the occupation as a factor to determine if online purchasing behavior changed at all. By running a T-test in SPSS we found out the mean value of our respondents.
Figure 6: One-Sample T-test on question 3 & 4
Because our answer 2 is “Once a week” and answer 3 is “Once a month” we can see that the mean value has moved towards “Once a week” since the COVID outbreak, which implies more online shopping than before. This will be further discussed in analysis chapter.
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5.0 Analysis
The analysis section consists of an analysis of the empirical findings from the survey, which is made from the consumers´ perspective.
5.1 Purchasing process in the eyes of respondents
COVID-19s impact on the purchasing process is one of the greatest impacts in history. The process itself as well as interaction all limited due to restrictions and lockdowns (He & Harris, 2020). Restrictions such as social distancing lost consumers who regular visited crowded places, which slowed down the consumption and the rate of the virus spread. Even the world economy was affected which is an indication to support this hypothesis. The example in behavior change described in Kirk & Rifkin (2020) study indicates that consumers focus shifted their habits in their household, using the kitchen, baking and similar things.
This theory is supported by our data collection from Statement 4, where the respondents confirmed our initial theory of a change in the ways to make purchases. The mean value of the respondents was 5.33 on the scale from 1 to 6, where 1 is no change and 6 is an actual change.
This suggests that consumers see a change in the purchasing process and how they do business, which supports our hypothesis 1:
• Consumers have changed their purchasing ways during COVID-19.
5.2 Purchases online before and since COVID-19
The younger generations technology habit, especially with computers, makes online purchasing attractive, even though it is not fully covered on requirements for an older generation (Tian et al., 2017). The social aspect is completely missed when purchasing online, which some consumers dislikes when they might need guidance and expertise from a retailer. Furthermore, the social and entertainment factors when shopping is only experienced in a store (Prasad & Aryasri, 2009). When deciding in a complex environment sometimes it’s better to sleep on it to clear the head from unconscious thoughts, which will clarify the decision (Gao et al., 2012).
Brand choice and price sensitivity is two factors which changes when looking at the two ways to make a purchase (Danaher & Davis, 2003). The comparison between online and in store purchases, with the current situation in mind, could either simplify and open new possibilities for the consumers who force themselves to make purchases online due to restrictions. On the back side of the coin it complicates the simple purchases, which indicates a double-edged sword.
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Figure 7: Data from spss regression analysis, model 1 & 2.
Model 1 in Figure 7 is the regression analysis where we can see significance of 0.00 with R square
change of 0.346 which indicates online purchases has increased.
Model 2 in Figure 7 is the regression analysis where we added the occupation as a factor to Model 1,
which indicates there is no significance (0,619) between the groups in occupation.
The mean of question 3 & 4 was 2.95 and 2.57, presented in Figure 6, we could state that based on our results, online purchasing has increased since the outbreak of COVID-19.
In order to evaluate our hypothesis (H2 & H3) we ran a regression analysis in SPSS comparing our previous findings to occupation, which we found no significant effects between the data groups. Even though there is an increase it is not significant enough to be accepted. In chapter 4.3.2 we can see that the online purchase has increased, as described in Model 1, by comparing Question 3 and
Question 4 without an external factor.
When analyzing the statistics eMarketers gathered, presented in chapter 2.2, the online purchasing behavior has increased drastically over the last 8 years pre COVID-19. Combined with Lissitsa & Kol (2016), study regarding how generations grew up in different technology eras, this is possibly a source of error to H2 that the younger generation already made a great amount of purchases online before the pandemic.
Based on the empirical findings in this chapter we found no support for hypothesis H2 & H3:
• Students do NOT make more purchases online than in store during COVID-19
• The other classes tries to make more purchases online rather than in store during COVID-19
5.3 Online vs. In store
To describe the contrast between online purchases to in store we use theory described in 2.1 Purchasing process. Costa (2011) describes the state of trust as when the risk is minimized, trust improves. He describes the weight which vulnerability, expectation and control for the customers when building trust. With the growth of online purchases, ensuring quality is not always guaranteed. When making the decision to purchase the consumers satisfaction level will tell if they will make another purchase, depending on if their expectations are met or not (Kotler et al., 2017).
Our reasoning behind Statement 3 & 4 is to get an understanding how comfortable consumers feel regarding expensive items only. The reasoning to not gather empirical data on regular items purchased online and in store is because the respondents have a large sample size to choose from, which
generates more errors than answers. Regular priced items are purchased on almost a daily basis which becomes an even more personalized experience. Understanding expensive item purchases is also personal; the consumer likely has a smaller sample base to choose from regarding which memories to
28 pick from when answering the questionnaire. Conspicuous consumption plays a role as a source of error in these empirical findings, as described in 2.2.1 Decision making to expensive items, which indicates that wealthy people do not reflect on more expensive purchases.
When we interpret our results from statement 1 & 2, we noticed a big change in the mean values. The mean value, on a scale from 1 - 6, the mean value difference was 1.29. We decided to run a paired sample T-test in spss to see the significance and correlation.
Figure 8: Paired sample T-test Online vs. In store
The significance was 0.000 and correlation 0.216 which indicates that consumers feel more comfortable in a store compared to online when purchasing expensive items.
Even though online shopping attracts the younger generation as described in Tian et al. (2017) paper, our 265 respondents agreed they did not feel comfortable. By factoring in this which is previous described as a key factor upon purchasing and the prevailing circumstances which advises you not to socialize with other people then the once you see daily, we realized how the purchasing process was affected. If you want to make an expensive purchase, you must go against the restrictions and recommendations regarding COVID-19 or refrain to purchase.
Based on the empirical findings in this chapter we find support for hypothesis H4:
• Consumers are NOT comfortable purchasing expensive items online.
5.4 Further analysis
We asked our respondents to estimate their perceived knowledge about what age group spends more money online rather than in a physical store, presented in Question 5. From this we could see that the perceived age-group was between age 25-35, beating the two age-groups tied for second by almost a 15% margin. Mentioned in Chapter 1.2, a research amongst the Canadian community was made and the conclusion of this was that one-stop-shop retailers that are situated online would see success during this pandemic with 24% at bigger retailers such as Costco and Walmart, also 18% of
Canadians plan to only make their purchases through online marketplaces such as Amazon. What we have seen since the start of the pandemic is a shift in where consumers are spending their earnings, with a dramatic focus towards e-commerce (Tam, 2020).
29 In our questionnaire we asked our respondent how much of their purchases they make online since COVID-19. The mean value of 3.84 in Statement 3, show more then 50% of our respondents trying to make more purchases online. One of the main limitations of the study was facing was that we could not connect the research to the consumers economy, because it would be too far from our research question, which swaps the focus on adding private economy. We did not evaluate any form of retailer perspectives in this paper for the same reasons. Because of this we see the opportunity for a further study to be made with this aspect in mind.
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6.0 Conclusion
In the final section of this thesis, the findings and conclusions are presented and summarized based on the analysis made in the previous chapter. The conclusions are presented from a consumer
perspective, which is lined with the proposed research question. The implications as well as the limitations are also presented in connection with the conclusions found. Lastly, future
recommendations for research are suggested.
The purpose of this study was to understand how COVID-19 impacted the purchasing process from a consumer perspective. At first, our research was represented by previous studies and works of literature which led us to understand the current, and previous, situation. How the purchasing process changes during a crisis and how the marketing philosophy is impacted.
The buying behavior, in store and online, was reviewed and examined to create four hypothesis which would find support from chosen theories.
Hypothesis 1: Consumers have changed their purchasing ways during COVID-19
Hypothesis 2: Students do NOT make more purchases online than in store during COVID-19 Hypothesis 3: The other classes tries to make more purchases online rather than in store during
COVID-19
Hypothesis 4: Consumers are NOT comfortable purchasing expensive items online.
We found empirical evidence from our survey that supports hypothesis 1 and 4.
Hypothesis 1 was supported in two ways. From empirical data which show a mean value of 5.33 of our scale from 1-6 with 84.2% choosing alternative 5 or 6. The other way from our theories that suggest the change in consumer behavior during a crisis, such as a pandemic.
Hypothesis 2 was not supported from our empirical findings. There was no significance (0,619) that indicates students does not make more purchases online. The students did not make more purchase online which could indicate two things. Either students did not take the restrictions and limitations as COVID-19 brought as serious as the rest or they are used to make purchases online before the pandemic started.
Hypothesis 3 was not supported from our empirical findings. There was no significance (0,619) between the groups in occupation. From our findings we could state that online purchases have increased generally, but not significant enough.
Hypothesis 4 was supported from our empirical findings. We could see that the mean value had increased with 1.29, from 3.94 to 5.23, with a significance of 0.00 and correlation of .216. Chosen theories as well as previous studies raised a flag to us when it came to purchasing expensive products online. Factors such as the need of extra evaluation of products and companies with a positive mindset.
31 The impact includes purchasing process theories with social interactions, attention and product
delivery. The decision making process, which is the foundation of making a purchase, as described in Hypothesis 4 in our conclusion.
“How has the COVID-19 impacted purchasing process?” is the soul research question to this paper. By evaluating previous studies, empirical findings and theoretical framework we can state there has been an impact. First the consumers ethics with the implemented restrictions, second the marketing fundamentals including decision- and purchasing processes within consumers buying behavior. Third the CSR and how companies get interpreted has all been affected which indicates how big of a game changer COVID-19 is.
7.0 Further Studies
Further the community of marketing scholars needs to urgently comprehend and research the role of spirituality in modern consumption. It would be interesting to explore the correlates of this forced consumer behaviour with other variables such as learning from crisis, simplicity, changing needs, personality, culture, nationality and frugal behaviour and age. When it comes to definitions of consumerism in both qualitative and quantitative researchers, the authors need to fully comprehend this phenomenon to be able to explain its dynamics in the marketplace post-COVID crisis. This can offer the post-COVID universe a consumption model that brings back the rich cultural heritage of consumption practices designed around the theories in textbooks but around philosophies of coexisting with mother nature.
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