Online grocery shopping : an empirical study looking at the influences of price sensitivity, time pressure and brand importance on consumers’ purchase intention when comparing electronic grocery shopping to physical gro

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Master Thesis

Online Grocery Shopping

An Empirical Study looking at the Influences of Price Sensitivity, Time Pressure and Brand Importance on Consumers’ Purchase Intention when comparing Electronic Grocery Shopping to Physical Grocery Shopping

Student: Claartje van Meeuwen Student Number: 6042058

Date: October 2nd, 2014

First Supervisor: Prof. Dr. Jozef H.J.P. Tettero Second Supervisor: Drs. Ing. A.C.J. Meulemans

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Outline...13 Literature Review ...14 Time Pressure ...14 Price Sensitivity ...18 Brand Importance ...23 Policy ...28 Conceptual Model ...31 Method ...32 Research Method ...32 Variables ...34 Participants ...37 Results ...38 Descriptive Statistics ...38 Statistical Tests ...40 Hypotheses Testing ...49 Discussion ...51 Empirical Findings ...51 Implications ...52 Limitations ...53 Further Research ...54 Final Conclusion ...54 References ...56 Appendixes ...62

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Acknowledgements

Part of the Master Business Studies at the University of Amsterdam in the Netherlands is writing a thesis. The work presented in this thesis is original, and only the references that are mentioned in the reference list are used to acquire the necessary information. Before I finish my study at the University of Amsterdam, I would like to thank some people.

First, of course, I would like to thank my thesis supervisor Dr. Jozef H.J.P. Tettero for guiding me through the writing process of this thesis, he always had a critical note which brought interesting new insights. Besides this, I would like to thank all the participants for giving me the necessary input to do my analysis, without them this thesis would not have been possible. I want to thank my study mates, for all the time they joined me in the library, the countless coffees and lunches we had together were always a pleasure. And finally I would like to thank my family for their endless support during my student years. A research project is never the work of someone alone, that is why I want to thank you all!!

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Abstract

The Internet changed our life in a lot of different ways, it made it possible to order the products we need from home. This thesis specifically focusses on one type of online shopping: electronic grocery shopping. This thesis looked from a consumer perspective at the differences between online and offline grocery shopping. When you understand these differences, the retailer can better anticipate to the needs of the consumer. This thesis focused on the impact of time pressure, price sensitivity and brand importance, which resulted in the following research question: What are the Influences of Price Sensitivity, Time Pressure and Brand Importance on

Consumers’ Purchase Intention when comparing Electronic Grocery Shopping to Physical Grocery Shopping?”. Besides this, we also looked at the possible moderating effects of search and

experience goods. The results from our analysis showed that time pressured people did not have

a higher purchase intention for electronic grocery shopping comparing to physical grocery shopping, but did have a more positive attitude against online shopping, The influence of brand importance and price sensitivity on purchase intention did not differ between electronic and physical grocery shopping, and there were no moderating effect for search and experience goods.

Keywords: Electronic grocery shopping; Physical grocery shopping; Price sensitivity; Time

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Introduction

General Introduction

No one can deny the influence of the Internet. The way people communicate, gather their information and make choices, they all dramatically changed with the introduction of the Internet. The Internet offers a worldwide platform to exchange information and communicate with each other, and turned the world into a global society connected like never before. With the ease people can use the Internet nowadays, through their mobile phones, tablets, laptops, computers, television and gaming consoles, people are turning to the Internet more than ever. In the table below you can find the Internet usage details amongst the Dutch population, and conclude that people from the Netherlands spend on average 96 minutes per day on the Internet, which fluctuates to a 144 minutes per day for people between the 18 and 24 (Mark & Ganzach, 2014).

Table 1

Mean Internet Usage Amongst Different Dutch Target Groups (hours per week)

2011 2012 Index Total (13+) 11.3 11.3 100 Men 12.5 12.5 100 Women 10.0 10.2 102 13-17 year 13.6 13.5 99 18-24 year 17.6 16.8 95 25-34 year 13.4 14.4 107 35-49 year 11.0 11.1 103 50-64 year 9.0 9.0 100 65+ 6.2 6.2 100 High educated 13.4 13.3 99 Medium educated 10.5 10.6 101 Low educated 7.7 8.3 108

The Internet changed the world in a lot of different ways. For instance, it transformed the way people communicate with each other. Gone are the days of sending letters and waiting days for reply. We have reached a world where we can get in touch with anybody in a few seconds with just a click on a button. It also changed the way we acquire our information, in the past we had to go on a trip to the local library and look in heavy weighing encyclopaedias to

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search for the information we need, just a small internet start-up in the nineties changed all of this, it’s called Google. These are just two examples of how drastically the Internet has changed our life. Taken this together with the amount of time we spend on the Internet, we can conclude that the Internet can be seen as one of the most influential inventions ever. A world without it is simply unimaginable right now. As our dependence on the Internet has grown over the past decades, we expect this will grow even further in the future.

Online Shopping

The Internet also changed the way people can buy their goods. In the past we had to go to a physical shop to buy the products we need, nowadays we could order almost everything we want from home. From computers, to holidays and vegetables, nearly everything you can imagine is available on the Internet. The use of the Internet as a platform for shopping has been growing extraordinary over the past decades, with sales and the adoption of consumers

increasing every year (Lim, Widdows, & Hooker, 2009). In the figure below you can see that the growth of online sales in the online retail segment has been growing with no less than 17 percent over the last years (Seitz, 2014). By 2016, it is predicted that the Internet will influence more than 50% of all retail transactions, which represents a potential sales opportunity of almost $2 trillion (van Bommel, 2014). These shopping trends clearly reveal that online sales are growing in importance and we cannot ignore them anymore.

Figure 1

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Online Grocery Shopping

This thesis specifically focuses on one type of online shopping, namely electronic

grocery shopping. Electronic grocery shopping refers to “the consumers’ ability to order groceries from home electronically and the subsequent delivery of those ordered groceries at home” (Gillett, 1976). In the United States 14% of the households shop regularly online (Barsness, 2013). Although we cannot generalize this to the number of Dutch households that shop online, it does give an indication about the share of online shoppers in the grocery segment. You can imagine that in the Netherlands this proportion will be a bit lower. This mostly because of two reasons. Firstly, because in America the consumers were already used to ordering groceries from home (catalogues shopping) and secondly because the American live in general further away from a supermarket, so the adoption of online grocery shopping will be easier in America.

Although we just concluded that online sales have been growing over the last years, this growth has been rather different across different retail segments. Previous research from Irvine, Richardson, Fear, & Denniss (2011) show that fresh food is the product least considered to be bought online, as you can see in the table below. There are a number of reasons why this

segment is not growing as fast as the other segments; the next paragraph will take a look at this. Table 2

What do you shop online? Australian Research Institute, The rise and rise of online retail (2011)

From the former table we can conclude that the online grocery sector witnessed a difficult start, which resulted in a lot of struggling retailers (Ramus & Nielsen, 2005). As a consequence, there was little attention for academics as well as for practitioners to dive in this topic, which results in relatively limited research related to the grocery retail segment. Although online grocery shopping has witnessed a tough start, the current growth of online grocery shopping is something to watch closely (Lim et al., 2009). Online grocery shopping is growing at

Category Male Female

DVD & Music 84% 79%

Books 74% 83%

Electricals 79% 62%

Clothes & Shoes 52% 69%

Sports & Leisure Goods 54% 46%

Cosmetics & Perfume 41% 56%

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an impressive rate in Europe, and the forecast is that it will double in several countries over the next five years, accordingly market research from IGD ShopperVista (ShopperVista, 2013). The fastest growing electronic grocery markets are the UK, where sales have been €7.1bn in 2012, followed by France (€5bn), Germany (€1.1bn) and the Netherlands (€0.6bn).

Failures of Online Grocery Shopping

Although the concept of online grocery shopping looks really great on paper, it is still not very profitable for the retailer. The perceived convenience of online shopping looks very attractive, but is it really as good as it sounds? Let’s take a look at the downsides of online grocery shopping. One of the main disadvantages for the retailer is the fact that online grocery shopping in reality has yet to yield a profitable mass-market business model. Traditional supermarkets are extremely efficient, this because most of the consumers perform the labour-intensive work for the retailer: order picking in the store and the subsequent delivery of the goods to their home. With online shopping this needs to be done by the retailer, which leads to higher loan costs. People suggest that distribution costs of online groceries are double as high as the distribution costs of traditional supermarkets.

Besides this, the success of the online retail segment depends on market potential and distribution costs. When market potential is high and distribution costs are low there is an opportunity for profit. Right now the market potential is low in the online retail segment, and distribution costs are really high. Because the demand for online groceries is low, retailers try to get market share by offering low prices. This results in low margins with high operation costs: a nightmare for the retailer.

Besides a not very profitable business model for the retailer, there are also some

disadvantages from a consumer perspective. One major obstacle is really simple; people are just happy with how they get their groceries right now, so why would they order their groceries online? In the figure below you can find some other reasons why online grocery shopping is still not completely adopted by the consumer.

Disadvantages of Online Grocery Shopping:

1. Grocery Shopping is a Social Experience:

Families go to the shops together to look through the aisles and plan their meals. Singles visit the supermarket in order to attract potential dates, and elderly go to the store for social contacts. Al these social contacts will disappear with the online shopping experience.

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2. Lack of Quality Assurance:

You can’t determine the freshness and ripeness of fruits and vegetables online. You can’t hold it, feel it, smell it or tap it to determine its quality. When buying a steak or a piece of fish, shoppers most likely want to see the piece they are getting. Once again they can determine freshness from the colour and odour, which can’t be communicated online. 3. Consumers Dislike Delivery Time Windows:

While home delivery looks convenient for consumers, because it saves you time of going to the supermarket, the delivery time slots are often limited and in conflict with work schedules. Grocery delivery requires that you have to stick to a schedule so you be at home when they deliver the groceries. If you can’t immediately cool your stuff, freshness will get lost.

4. Speed Matters:

Especially in Europe, consumers buy the ingredients for their meals the same day they prepare them. They don’t want to plan their meals days in advance. While this is less common in America, where people don’t do their groceries last minute.

Yet, while in other situations people have quickly and dramatically absorbed all different kind of digital technologies, the integration of electronic grocery shopping is growing much slower. This means that it is really important for the online food and grocery retailers to take a look at really simple question from a consumer perspective, like how to attract the consumer to online shopping, but also, how to keep them. To give answer to questions like these, we have to look at factors that drive the consumer.

Consumer Behavior & Online Grocery Shopping

As mentioned above, it is important to look from a consumer perspective at the differences between online grocery shopping and offline grocery shopping. When you understand these differences, the retailer can better anticipate to the needs of the consumer. Besides this, the online retail segment is actually growing, so research is needed in understanding how

consumers behave in the online grocery segment. How do people behave online? How does this differ from how people behave offline? It’s time to look at grocery shopping from a consumer behaviour perspective. Although there are many factors that influence shopping behavior, this thesis focus specifically on the impact of time pressure, price sensitivity and brand importance on consumers purchase intention when comparing electronic grocery shopping to physical grocery shopping, because these tendencies are likely to have an impact on the online grocery sales in the coming years.

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Time Pressure

One thing we do know is the fact that consumers are facing more time constraints nowadays than before (Morganosky & Cude, 2000). Concerning a time-use research from the Central Plan Bureau in the Netherlands, 4 out of 10 people are feeling rushed for at least one day a week (Cloin, van den Broek, & van den Dool, 2013). Although this is the minority of the

population, it still concerns hundreds of thousands of people. Feelings of time pressure seem to appear more in 2011 in comparison with 2006, but without the actual existence of less free time. Actually, people in the Netherlands don’t have less objective hours of free time than in the past, but they do feel more time pressured than before. A number of reasons could explain this increased level of subjective time-pressure. For instance people can have a hard time in combining and adjusting their tasks, or they feel more time pressured because they have the feeling that they do not have enough time to rest. In America people feel also more time-pressured, one of the reasons for this is the significant growth in both dual-incomes as well as single parent families, which means that men and women spend more time in working activities than before (Jacobs & Winslow, 2004). As a result the subjective levels of time pressure has increased over the past years (Presser, 2003). Time pressure occurs when people have the perception they have insufficient time to complete a task and they are aware of the possible negative consequences of missing a deadline, which evokes stress and a certain need to cope with the limited time constraint (Ordonez & Benson, 1997). There prevails a general tendency for consumers that they have ‘too much to do in too little time’. Which resulted in a growing level of time pressure experienced by the consumer. A possible solution for this increased level of time pressure could be online grocery shopping. One of the main reasons people are doing their groceries online is because of the convenience of online shopping and because it saves time (Morganosky & Cude, 2000).

Price Sensitivity

Besides the increased level of subjective time pressure, consumers also have become more value-conscious than before, partly due to the economic crisis (Morganosky & Cude, 2000). Consumers in the Netherlands have in general less money to spend than before, or are more afraid of spending money in these days of an economic recession (Bronner, 2011) . This makes consumers more price sensitive than before. Price sensitivity refers to the relative importance of price in a consumers overall evaluation of a product. Price is one of the primary influencers in making purchase decisions (Kim, Xu, & Gupta, 2012). Consumers could possible choose to shop online because in general the Internet gives you better insight in price and product information (Porter, 2001).

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Brand Importance

Regardless of the buying context (online/offline), people face uncertainties when buying products. This because they want those products that match their needs, and a mismatch could have unfavorable consequences. To reduce the chance of a mismatch, consumers use several strategies to decrease their uncertainty, like brand loyalty, store image or word-of-mouth (Kim, 2001). The key function of a brand is that it serves as an indicator of quality, or that it reveals some features that differentiate the product from their competition. Brand names are the most frequently used extrinsic cues that consumers use to evaluate the product they want to buy (Dawar & Parker, 1994). Because brand names are such an important factor in purchase decisions it is interesting to look at the importance of brands in an online and offline shopping environment. Are brand names more valuable online, or more valuable in the traditional supermarket?

Search & Experience Goods

However, there is a difference between type of products in supermarkets, Nelson (1970) made a distinction between experience and search goods. A search good refers to a product or service with certain characteristics that is easily to verify before purchase, while this is more difficult with an experience good. Paper (for example) refers to a to an example of a search good, because it can easily be compared and evaluated prior to purchase. An experience good refers to a product with a lot of sensory attributes, such as smell, flavour and feeling, which are more difficult to verify beforehand. A bottle of wine is a typical example of an experience good, because this good requires actually experience to be able to evaluate it. Search and experience goods could have a moderating effect on purchase intentions; this will be elaborated further in the literature review.

Low Involvement

Not to forget is the fact that grocery shopping is for a lot of consumers a low involvement activity. Consumers fall in a pattern of routine buying behavior, characterized by the small amount of information search, little consideration in brand choice and relative ease of switching brands within a category (Winter & Rossiter, 1989). Consumer involvement is an important factor in consumer marketing, because it drives the motivation of the consumer, which can explain several behavioral outcomes such as number and type of choice criteria, time of decision making process, variety seeking behavior and brand switching (Beharrell & Denison, 1995). We have to keep this in mind when we look at shopping behavior.

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Research Question

There are loads of factors that could influence the differences in purchase decision behavior between online and offline shopping, from demographical differences, to differences in

characteristics and behaviors. Because it is simply out of the scope of this thesis to research all these factors, this thesis specifically focuses on three important factors and their possible influence on grocery shopping. Because we suggest that these factors are likely to have an impact on the online grocery sales in the coming years. This leads to the research question:

“What are the Influences of Price Sensitivity, Time Pressure and Brand Importance on Consumers’ Purchase Intention when comparing Electronic Grocery Shopping to Physical Grocery Shopping?”

Empirical research is needed to understand how search and experience goods could moderate these implications.

Theoretical and Managerial Contribution

It is important for academics as well as for practitioners to determine if there are differences between online and offline shopping behavior, and if there are differences, understand the reason of those differences. Research in the area of online shopping behavior might not be surprising because of the fact that the success of any electronic commerce system lies in the adoption of the system by the consumer. This means that the success of a website depends on the satisfaction from a consumers level, so it is really important that the retailer satisfies the consumer online. Hoque and Lohse (1999) also argued the importance of research within this area, they mentioned that the success of ecommerce and online shopping depends on consumer interfaces and the way consumers interact with their computers. Consequently, the design of a website that gives the consumer a satisfying experience is important, because this will lead to a possible return to the website. This makes it important to look at factors that influence online shopping behavior. Because you first have to look how consumers behave online, and find out which factors they think are important, and after that you can create an optimal website which gives the consumer a satisfying experience.

There will be people who just shop online, or just offline, or have a combination of these two ways of shopping. It is important to research in which situation and for what kind of products consumers make the choice between online and offline shopping. In other words, are there differences in choice behavior between online and offline shopping, and if so, why? These answers are needed for companies to create an online retail strategy. Their forecasts will be more reliable if they are based on actual behavior of online consumers instead of the guesses

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offered by marketers. It is argued that shops that also sell their products through Internet and apps on smart phones have the future. These ‘cross channels shops’ integrate physical, mobile and other distribution channels (Dujardin, 2014).

Besides this, it is also important to look at consumer characteristics in the online channel. From a managerial perspective it is convenient when they have certain classification schemes that provides understanding of the different characteristics of online consumers. This makes it easier to target different groups of consumers. Given the growth of online retailing, a typology of consumers would be ideal to make a better fit with the strategy that marketers make.

Outline

The next chapter consists of a literature review together with hypotheses concerning the influence of time pressure, price sensitivity and brand importance. Different perspectives will be reviewed, followed by hypotheses. In Chapter 3, we describe the main characteristics of our participants and our methodology for testing the hypotheses. Chapter 4 contains the data and results of the empirical analyse, the results from the formulated hypotheses will be presented. A summary of the main findings and insights of the study will be summarized and we will mention some limitations of this research and there will be some suggestions for further research

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Literature Review

Concluding from the research question: “What are the Influences of Price Sensitivity, Time

Pressure and Brand Importance on Consumers’ Purchase Intention when comparing Electronic Grocery Shopping to Physical Grocery Shopping?”, this literature review falls into three parts;

time pressure, price sensitivity and brand importance. The following section offers a detailed overview of the significant literature available for these topics. Besides this, we will also take a closer look at the possible moderating effects of search and experience goods, mention the importance of an informative retailer’s policy and give some suggestions on how to improve this.

Time Pressure

Time is the most precious thing in life; it influences every single moment and everything we do. Without a doubt we can say that time is extremely important; time helps us to structure our daily lives and activities, so that we can live better organized and more productive lives. But time gives us also a lot of stress. People are having a hard time combining all the daily tasks in the amount of time they have in a day, which results in time-pressure. Time pressure has been characterized as an exogenous variable, which influences consumer behaviour (Howard & Sheth, 1969). Time is one of the critical sources in human judgement and decision-making. If people don’t have enough time a lot of activities assumed to underpin good judgement. Studies revealed that time pressure is a very common feature that influences decision making in professional as well as in personal situations, and concluded that time constraints is one of the most reported stressors in daily life (Chamberlain & Zika, 1990).

Perceived Time Pressure

The Time Use Survey from the Central Plan Bureau of Dutch households in 2011 is a representative study which takes a closer look at who is experiencing time pressure and the reasons for this perceived time pressure. These subjective measures are useful because understanding how people experience their time is a key factor in understanding how this might affect their well-being. We already mentioned in the introduction that in the Netherlands 4 out of 10 people are feeling rushed for at least one day a week (Cloin et al., 2013). Although this is the minority of the population, it still concerns hundreds of thousands of people. Overall, women (40%) reported more often feelings of time pressure than men (35%). Parents with a child younger than four years old reported those feelings the most. Feelings of time pressure seem to be higher in 2011 when comparing it with 2006. The reason for this increased level of

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subjective level of time pressure is not very clear, this because there was no growth in the amount of time people had to spend on obligations. This means that there was no decrease in the objective hours of free time. However, this increased feeling of subjective time pressure seems to fit with the international trend of being more time pressured nowadays. The

Australian Time Use Survey of Australian households in 2006 is another representative study. Responses from 3244 men and 3658 women aged 15 years or older were available, they measured the subjective level of time pressure. The majority of men and women reported that they experienced feelings of being pressed for time, around 14% was always time pressured and around 35% said they were sometimes in a rush or pressed for time. In the table below you can see the numbers of the perceptions of men and women of being rushed or pressed for time. Figure 2

Perceptions of being rushed or pressed for time, males and females

The greatest difference in time pressure was found when they compared working hours between people. In general people with longer working hours (50 or more per week)

experienced more time pressure than people who were unemployed. But there were also other factors influencing the perceived level of time pressure; parents with children under 15 years had a higher subjective level of time pressure than those with older children or without children. Men and women who lived together experienced more time pressure in comparison with people who lived alone. In the table below you can see the reasons for those people who were always/often or sometimes rushed or pressed for time. The reason for time pressure, which was most often mentioned by the respondents, was finding the balance between work and family. Pressure of work or study was often more named by males while women more often named the demands of family as their source of feeling time pressured (Australian Bureau of Statistics, 2006).

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Table 3

Reasons for feeling rushed or pressed for time, if at least sometimes time pressured

Males Females

Balancing work and family 45% 46%

Pressure of work/study 39% 31%

Demands of family 22% 38%

Taking too much on 27% 32%

Too much to do/too many demands 22% 25%

Not good at managing time 16% 14%

Unpredictable working hours 18% 10%

Transport difficulties 9% 9%

Other reasons 2% 2%

Sample size 2,401 2,907

Time Pressure & Online Grocery Shopping

From this information we conclude that consumers are feeling more subjective time

pressure than in the past. This increased level of time pressure could have an impact on the way consumers do their groceries. Previous research showed that time-pressure is a situational variable that has an effect on the consumers’ decision-making in a store; due to the fact that the hectic tempo of daily life creates moments of time-pressure that are periodic and situation related (Kenhove & De Wulf, 2000). Research from Dellaert, Arentze, Bierlaire, Borgers, & Timmermans (1998) showed that, because of time pressure, a lot of consumers were more concerned about the level of efficiency of their shopping patterns. With efficiency, they refer to the number of shopping trips to the store, the time of shopping and the use of shopping from home. Research from Kenhove & De Wulf (2000) showed that time poor customers wanted to find the desired products as quickly as possible and wanted to have fast service at the check-out. They also did not like to stroll around the store. These studies assumed that people only feel time pressured for a short period because they have certain work or study related deadlines, and feel relieved when these deadlines are over. However, nowadays we live in a world where time-pressure has become normal and everybody has ‘too much to do, but not enough time’ (Gunthorpe & Lyons, 2004). Kim & Kim (2008) show that chronic time pressure moderates the influence of shopping enjoyment in physical stores, which means that consumers experience less enjoyment while doing their groceries when they experience time pressure. A possible solution that may reduce the experienced level of time pressure for consumers could be:

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ordering groceries from home. This thesis looks at the influence of time pressure on consumers purchase intention when looking at electronic grocery shopping and physical grocery shopping.

A Time-Saving Solution

Kinsey & Senauer (1996) suggest that the ultimate timesaving solution might be home shopping. Morganosky & Cude (2000) concluded that saving time was cited as one of the primary reasons for online grocery shopping. 73% of the respondents named that saving time and convenience are the most important reasons for using online grocery shopping. Consumers for example said: ‘Online grocery shopping saves me time, the time I took to grocery shop I use for other things now’ or ‘The time I normally would spend on grocery shopping I use for other things now’. However, this research was conducted in America, which differs from the

Netherlands in a lot of ways. Mostly because the supermarket density is much lower in America, which means that going to a supermarket will take more time in America. In the Netherlands store density might be higher, but the consumers still have to go to a store, which does save time, so in the Netherlands, home shopping could also be a potential solution. Wolfinbarger & Gilly (2001) concluded that one of the primary benefits of online shopping is convenience, because consumers can shop in their own environment and they can do it at any time of the day or night. Farag, Schwanen, Dijst, & Faber (2007) found an indirect positive effect of time

pressure on online buying; because time-pressured consumers often shop from their home, they also frequently buy online. As you can conclude from the above information, consumers

perceive online shopping to be a time saving practice. Strangely enough, survey research from Alreck & Settle (2002) indicated that indeed, consumers perceive online shopping as time-saving, but those who reported themselves as really time-pressured did not report online shopping to save more time, although they thought that online shopping would be a time-saver.

Situational & Personal Time Pressure

Alreck et al. (2011) tried to solve this contradiction, from their research they conclude there are two forms of perceived time pressure: the first one is situational, and the other one is

personal. Situational time pressure, the more obvious one, is the one, which refers to people

who have to complete too many tasks in too little time. Those people often explain their time pressure by the demands associated with their career, family and affiliations. The situational sources from this type of time pressure assumes that this result from circumstances imposing demands on one’s time is involuntarily. This means that people feel time pressured because of earlier choices in life, but this is not the case for everyone. The other form of time pressure is

personal time pressure. This group of people who report feelings of being pressed for time, put

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take on more and more activities until their days are literarily full, this seems to be a personality factor. We have to take this in mind when we measure time pressure with our respondents and make a difference between situational and personal time pressure, because the effects could be different for these two groups of people. Only people who feel situational time pressure might be affected by the advantages of online shopping. The advantageous of online grocery shopping is the fact that a consumer can go shopping without being dependent of opening hours, they do not have to drive or wait in the stores an do not need to invest in physical efforts of carrying their groceries from the stores to their home. This leads to the following hypotheses:

H1 The influence of time pressure on purchase intention will be higher for electronic grocery shopping than for physical grocery shopping.

As mentioned in the introduction people are facing, besides more time constraints, also more budget constraints. The amount of people who face budget constraints have been growing in het last couple of years, partly due to the economic crisis Morganosky & Cude (2000). For example, households in the Netherlands spent on average 2.3 percent less in 2013 compared to a year ago. The expenditures of Dutch households have been decreasing constantly for the last one-and-a-half year. On durable goods, such a new cars, furniture, curtains, washing machines and electronics, the sales decreased with a whopping 11.9 percent. Also in food and drinks the expenditures have been decreasing in the last periods, may be with a less shocking percentage, but still with 1.7 percent (Mooste, 2013). From this analysis we can conclude that people have less money to spend or feel more insecure about spending money.

Importance of Price

56% of the consumers mention that price is the primary influencer in making purchase decisions, as you can see in the next figure. You can also see that the importance of price increases when income falls. In other words, when consumers have less money to spend, they become more price sensitive. Price sensitivity refers to the degree of reaction provoked by the consumer due to price differentials. However, this research was conducted in America, a place where the people are really focused on discounts and couponing. But also in the Netherlands price is the most important attribute in making a purchase decision (Economisch Bureau, 2012). This research concluded that when consumers make purchase decisions they

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use price as the primary influencer. 60% of the respondents mention that price is the most important attribute, more than a third (36%) of the consumers’ mentions that quality prevails when shopping for groceries.

Figure 3

Primary influencers of purchase decisions by income level

Generic Brands

In a broader sense, price sensitivity refers to the reaction of consumers to price changes. There are different ways how consumers can respond to price changes. People can choose to go to another cheaper supermarket, they can choose to buy less luxurious products or they can choose to switch from a branded product to a generic brand. The easier people change to a generic brand, the more price sensitive they are. High price sensitive consumers would already switch to another brand with only a small price change. A survey from Accenture in 2011 has tested the reaction of U.S. consumers to price changes. From the figure below we can conclude that around 40 percent of the U.S. consumers would switch from a brand name to a generic product when the price increases between 10 and 20 percent (according to a survey from Accenture in 2011). This survey also indicates that around 20 percent of the consumers would switch from a branded product to a generic product when the price increases with less than 10 percent. This indicates, that consumers are quite price sensitive when it comes to grocery shopping.

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Figure 4

Brand Price Increases and Generic Products (% of respondents, answering ‘at what level of price increase do you switch to generic?’)

Shopping Environment & Price Sensitivity

The next question is, in which situations become consumers more price sensitive; is this in an online or an offline shopping environment. Whereas people become more price sensitive, the Internet could help, by offering better insight into price and product information. The interactive nature of the Internet offers many opportunities for customers to improve the efficiency of online shopping, by improving the accessibility of product information and allowing direct comparisons (Alba & Lynch, 1997). Cook & Coupey (1998) argue that the improved accessibility of product information online leads to more knowledgeable customers, who are now better in making decisions and because of that will experience more satisfaction with the purchase they make. Increased availability of product information also helps customers in making more informed decisions, which will improve the customer satisfaction with their purchases. Ballantine (2005) researched the effects of the amount of product information provided in an online shopping environment and concluded that the amount of product information provided on the website had a significant effect on customer satisfaction (see the figure below).

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Figure 5

Effect of Amount of Product Information in an Online Shopping Environment on Satisfaction

Price Comparing Websites

In England there are already websites where you can shop online for groceries and which automatically compare prices and find the best offers in the leading stores

(hhtp://www.mysupermarket.co.uk/, see Appendix 1). How does this work? MySupermarket is a new type of supermarket that allows you to compare prices and shop online from the main UK retailers in one place. The website compares all the different supermarkets and tell you which supermarket gives the best price offer for the products you need. In Holland the website Supermarktx.nl (see Appendix 2), which has been launched this year, made it able for consumers to compare which supermarket offers the lowest price. For now, it is only a site where you can compare different goods from different stores, but it will be transformed in a site where consumers also can order their groceries. The Internet, and hereby also the introduction of the price-comparing grocery websites, leads to a better view a better view of product and price information online than offline for the consumers. Does this mean that the price of a product affects the consumers purchasing behaviours more in an online shopping environment than in an offline-shopping environment?

Product Information & Price Sensitivity

One of the main differences between online and offline grocery shopping is the ability to gain information about product attributes (price and non-price). Online information search is supposed to be less effortful than offline information search. Online we expect that there is relatively more information about non-price attributes. More information on these attributes could lower the relative importance of already available attributes (price), so would decrease price sensitivity. This suggests that online shopping could reduce the price sensitivity, because

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it is easier for the consumer to find a product that matches their needs. Alba & Lynch (1997) suggest that when information about the quality is important for the customer and there are different brands, interactive retailing can lead to lower price sensitivity. In the retail of electronic goods, researchers concluded that due to the improved access of product quality information the price sensitivity will be lower (Bakos, 1997). An experiment tested this too with online wine selling in a stimulated store. The participants reported that price elasticity was lower under conditions where they had information on both quality and price information compared to the participants who only had information about the price (Lynch & Ariely, 2000). Degeratu, Rangaswamy, & Wu (2000) researched how consumers responded to prices in an online shopping environment in comparison with an offline shopping environment, they found lower price sensitivity online in some categories (liquid detergent, soft margarine spread and paper towels). However, this was mostly due to the fact that online promotions are better signaled, so people become more aware of price discounts online than offline. Because grocery shopping is different from other segments, people are tending to look more at prices and less at product information (Lichtenstein, Ridgway, & Netemeyer, 1993). This could mean that the opposite could also be true, which suggest that consumers are more price sensitive online than offline.

Price Search

Although many academics think price sensitivity may actually be lower online than offline, one of the most common cited reasons for online shopping is price, and many retailers use price as a bait to lead their customers to their websites. A lot of retailers strongly fear that the lower searching costs of the internet will lead to an increased competition by broadening the competition from local, to national and even international (Lynch & Ariely, 2000). It is argued that this more intense competition between sellers, leads to lower prices and higher price sensitivity online (Anders, 1998; Bakos, 1997; Gove, 1999). The same would you suggest when you compare online shopping with price advertising; if online shopping lowers the costs of obtaining price information, it should increase the price sensitivity. Shankar, Rangaswamy, & Pusateri (1999) investigated the influence of price sensitivity on the Internet. They examined two factors of price sensitivity; the weightiness of price comparing to other attributes (price importance), and the customers tendency to look for better prices (price search). This article indicated that the Internet had no significant effect on price importance, but does increase the price search (probably due to lower searching costs). Cortese & Stepanek (1998) reported that several online sellers realized higher prices, on the average, if they compared it to the offline equivalent (e.g. AucNet, Easy Sabre). Taken all this information together, it is obvious that there is still no clear view on the situation. We suggest that because grocery shopping is a different

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situation than shopping for electronics etc., that price due to the lowering search costs for price information, price sensitivity will increase.

But, it could also depend on the type of product. Earlier mentioned, there is a difference in products available in the supermarket, there are search and experience goods (Nelson, 1970). A search good is easier to verify with inspection, while this is more difficult with an experience good. When a product has a lot of sensory attributes (experience good), which might be more difficult to verify the quality beforehand, the importance weights of the available attributes may increase (price). So we suggest that the situation will be different if you compare search and experience goods. This leads to the following hypotheses:

H2.1: The influence of price sensitivity on purchase intention for search goods will be lower for electronic grocery shopping than for physical grocery shopping.

H2.1 The influence of price sensitivity for experience goods will be higher for electronic grocery shopping than for physical grocery shopping.

Besides time pressure and price sensitivity, brand importance has also been discussed in the introduction. Concerning to the topic of this thesis, we take a look at the importance brands in an online and offline shopping environment. In other words; are brand names more valuable online or more valuable in the traditional supermarkets? Or, what is the influence of brand importance on purchase intention when comparing electronic grocery shopping to physical grocery shopping? Before we take a look at this question, it is important to take a look at the function of a brand and what brands mean to consumers.

Function of Brands

Brand names are the most frequently used extrinsic cues that consumers use to evaluate the product they want to buy (Dawar & Parker, 1994). People use brands before and during their purchase. Brands have an identification and a signaling function, which consists of (Franzen & Hoogerbrugge, 1995):

- Simplification of the selection process;

- Identification of the product and the product characteristics; - Origin;

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Keller (2003) adds to this:

- Reduction of search costs;

- Assigning of responsibility to the producer.

Consumers are, in general, not particularly good at processing large amounts of information. Consumers are also facing uncertainties when buying products, because they are not sure if what they buy is exactly what they are looking for, which could lead to potential mismatches. Brands can serve to reduce the chance of a mismatch, because brands can give you information about product characteristics. Brands provide the ability to give structure in the observation and memory, because certain characteristics of a labeled product can be subscribed to the brand. The brand name is than the trigger for information, a way to get information about positioning, quality or other product attributes that can be remembered quickly. Due to brands, the selection process has been simplified (Franzen & Hoogerbrugge, 1995). Keller (2003) state that brands have a special meaning for consumers. By previous experience and the marketing of a brand, consumers will learn more about a brand. And consequently, find out which brands satisfy their needs and which brands don’t. So finally, brands will make it easier for consumers to choose. Originally a brand served as an ability to give the product information about the origin of the product. The added value of a brand based on the belief in authenticity. Brands can tell us where the product comes from and who the manufacturer is, which allows us to assign part of the responsibility to the producer. A brand can also give us a signal about the quality of the product. The conclusion is that brands are important for consumers because they have certain functions. The special meaning of a brand in the mind of consumers can change perceptions and experiences with a product. Two identical products can be seen differently because of the brand perception of consumers.

Brand loyalty

People react very differently to brands. For a long time academics has focused on attitudes and their importance in understanding how people react to brands (Greenwald, 1989). Keller (1993) came up with the concept of Customer Based Brand Equity, which

suggests that brand knowledge is multidimensional, consists of attitudes, attributes, awareness, experience and personal advantageous perceived by the consumer. Some people are very loyal to a specific brand, this phenomenon is called ‘brand loyalty’. ‘Brand loyalty’ occurs when a person buys products from the same manufacturer constantly instead of a substitute product produced by another manufacturer (competitor)(He, Li, & Harris, 2012). For example, some people are very attached to one type of cola. Some will always and only buy Coke, while others will always choose for Pepsi. Brand loyalty can also result in recommendation of the brand to friends and family through word-of-mouth. True brand loyalty exists when consumers have a

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relative high attitude towards the brand which results in repurchase behavior. For the

manufacturer this could mean that they can command a premium price over their competitors, in some cases even when the quality of the competition is equal or even higher, and available at lower prices.

Evoked Set of Brands

However, we have to take in mind that food and grocery shoppers are rarely loyal to one single brand, nor do they consider all the presented brands in the grocery store. Their loyalty consists of an evoked set of brands, which refers to the group of product that come to mind when considering purchase. Of course, some shoppers are more loyal to one specific brand (Heinz Ketchup fans for example), while others are considering from a brand consideration set. In the figure below you can see how consumers are thinking, they have a preferred group of familiar brands which they consider when making a purchase decision.

Figure 6

Evoked Set of Brands

Use of Brands

Now we know the function of a brand and what brands could mean to consumers, it is important to take a look in which situations people use brands. When product information is low, consumers tend to rely more on extrinsic cues and brands become more important (Dean, 1999). Products with a famous brand name are in general more positively assessed than private label brands (Richardson, Dick, & Jain, 1994). When consumers have a small amount of

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play a significant role to reduce a consumers’ perceived risk (Dean, 1999). In the current literature they found evidence that a famous brand name plays an important role directly influencing the perception people have of the brand image and so on affecting purchase intention. Although this study looks at purchase intention, it is highly suggested that there will be a causal link between purchase intention and actual purchase (Venkatesh & Davis, 2000). From these studies we can conclude that consumers use brands when making their purchase decision.

Product Information & Brand Importance

Now we have to take a closer look at the differences between online and offline shopping behavior. As concluded before, when product information is low, brands become more important. In other words, brand names have a greater impact on choices in store environments where the total amount of information available is smaller for the consumer. As suggested before, the Internet provides better product and price information. Alba & Lynch (1997) stated that the interactive nature of the Internet improve the efficiency of online shopping by improving the accessibility of product information and allowing direct

comparisons. From this information you could suggest that, because there is more product information online, brands become less important online. Ward & Lee (2000) suggested that brands become less important for people with more Internet experience. Most likely because it is easier for people with more Internet experience to gather information online, people rely less on brands than in physical stores. In a world where almost everyone uses the Internet and so on, has Internet experience, you would say that the influence of brands will be higher for physical grocery shopping than for electronic grocery shopping.

Information Overload

But on the other hand, we already mentioned, that consumers are in general not particularly good at processing large amounts of information. In recent years, the term ‘information overload’ pops up everywhere. It refers to the difficulty a person can have in processing, understanding and making decision because of the presence of too much

information. Information Technology is one of the primary reasons why information overload is much more common nowadays. It could also be the other way around, because there is too much information online, people can’t process this all and brands become more important.

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Perceived Risk & Brand Importance

Besides the possible effects of information overload, some other studies have focused on the brand’s risk reduction function in an offline-shopping environment. Unfortunately,

relatively little researched focused on whether a brand has the same function on risk reduction in an online shopping environment. When consumers shop online, they can have concerns that do not exist in a traditional shop. Consumers may face potential hazards from technological problems, manufacturers, retailers, or hackers, they fear privacy and security problems, but also concerns about product choice because of the visual-only product display which could increase the perceived uncertainty in shopping online. As mentioned before, a brand name can serve as an risk reduction cue. Previous studies showed that perceived risk is influenced by the way consumers purchase their products (Kim, 2001) and that consumers have a greater perceived risk when they buy articles in non-store settings (Spence, Engel, & Blackwell, 1970), but also that consumers experience more uncertainty when they make purchase decisions without sensory product check (Cox & Rich, 1964). Online grocery shopping occurs in a non-store venue as well that it doesn’t allow sensor product inspection. From this information you would suggest that brands will be more important online than offline, because there is a greater perceived risk online, and consumers want to reduce this risk by using brands as a cue.

But as mentioned earlier, a lot of information can be communicated online, but not

everything. A supermarket can communicate information about price, weight and heritage of a fruit, but consumers are not able to check the subjective attributes of a product, like smell, flavour and feeling, so there will still be some uncertainty about the product. So it could be that brand names become more important online in some categories, but not in others, depending on the information available about the product. For experience goods, products with a lot of sensory attributes (fruits), there is more information available offline than online. For search

goods, products with a lot of non-sensory attributes (industrial products), there is more

information online than offline. This leads to the ‘halo effect’ argument, when there is a lot of information about both sensory and non-sensory attributes, the importance of brand will be reduced and when there is not much information in general brand names become more important. This leads to the following hypotheses:

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H3.1: The influence of brand importance on purchase intention for search goods will be higher for electronic grocery shopping than for physical grocery shopping.

H3.2: The influence of brand importance on purchase intention for experience goods will be higher for electronic grocery shopping than for physical grocery shopping

Policy

We live in a world where electronic and physical environments are rapidly converging, but where many directors (including in the retail segments) are still struggling to devise the perfect strategy in a cross-channel environment. Although this is getting more and more important. This because the Internet changed the balance of power, consumers are gaining the upper hand. Customer power is growing due to the Internet, because it gives the customer more options, more information and more simple transactions. A good customer-targeted strategy is essential to survive in this complex environment and companies need to meet the customer need anytime, anywhere. Customers have infinite virtual and physical options for researching and buying products. Companies have to respond to this, because as already mentioned in the introduction, researchers suggest that by 2016, the Internet will influence more than 50% of all

retail transactions, which represents a potential sales opportunity of almost $2 trillion. So a

informative retailer’s policy is necessary to survive.

A New Strategy

To respond to this constantly changing environment and to keep up with quick technology cycles companies need a different approach than before to manage the customer decision journey. According to an article from McKinsey (van Bommel, 2014) companies need to focus especially in three areas:

- Discover - Design - Deliver

With, discover, they refer to a secure analysis of customers’ behavior and past experience with the companies. With, design, they refer to the importance of well-crafted and compelling

customer experience in which all the interactions are designed in a way that helps the consumer through the decision journey. With, deliver, they refer to the subsequent delivery to the

consumer, companies need to focus on ‘always on’ marketing programs, in which companies involve the consumer in exactly the right way.

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Discover Area

As you might have noticed, this thesis specifically on the discover area. Before you start with designing and delivery you first have to understand your consumers, otherwise you cannot create the perfect strategy. So it is really important to determine if there are differences

between virtual and physical shopping, and if there are differences, understand the reasons of those differences. You have to look how consumers behave online, and determine which factors the consumers think are important, only then you can create an optimal website that gives the customer a satisfying experience.

Time Pressure

In the retail segment, it is important for companies to create more convenience for the customer. Kim & Kim (2008) showed that it is important that retailers not only focus on aspects like store atmosphere (e.g. merchandising, lighting, colour choice and music), but also pay very close attention to time-related factors, like the efficiency of location, service and parking, that may lower the experienced time-pressure of consumers. Kinsey & Senauer (1996) suggest that retailers have two different options. On the one hand, the retailer can improve convenience for the customer by increase the amount of tasks that can be fulfilled during a visit to the retailer. On the other hand, the retailer could also choose to reduce the amount of time spend on the completion of the shopping task. A possible answer to this might be: ordering groceries from home. Because consumers can shop any moment they want and don’t have to go to the physical store. That is why it is important to find out if more time-pressured people are doing more groceries online than offline comparing to less time-pressured people.

Executives are kind of anxious to learn how which impact the virtual world/Internet has on the price competition in their segment. A lot of executives fear that the Internet will increase price sensitivity and will enhance price competition. Does a customer looks more thoroughly for price information online? How do website characteristics like the availability of more product attributes influence a customers’ price sensitivity. All these questions needs to be answered to come up with a informative strategy. For example, if research concludes that price is more important than other attributes in a virtual environment, retailers can respond to this by enhancing the value of non-price related attributes. Or if people tend to search more for prices online, it is important to simplify the price search for the consumers and to offer them a wide range of different products with different prices,

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Nowadays it is getting more important than ever for companies and brands to have a good reputation online. This because social networks totally changed the way people can voice their opinions, they can share it straightforwardly with thousands of people. It is easier than ever for an upset consumer to harm a company and this could potentially cost a company a lot of money. However, it is still unclear how consumers respond to brands when you compare online and offline shopping. If companies know in which environments brands are more important they can adapt their strategy. For example, it a particular flavour/brand sells really well online, but doesn’t have this turnover in a physical store, a retailer should consider making it an online offering only. Or retailers can adjust the way they promote their products online and offline.

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Conceptual Model

The figure below serves as a conceptual model for the given hypothesis. This model serves as a guide through the creation of the survey and the analyses of the data.

Figure 7 A Conceptual Framework Price Sensitivity Time Pressure Brand Importance Purchase Intention Offline/Online Experience/ Search Goods Experience/ Search Goods

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Method

Based on the extensive literature review a research method has been established to explore the research question. This section will describe how the research question and the hypotheses are tested.

Research Method

For this study a survey was used to collect the data (see appendix 3). This means that a quantitative method has been used, which is a commonly used research strategy within

marketing research. Quantitative research refers to the systematically empirical investigation of social phenomenon, and helps us to quantify data and generalize results from a sample to the population of interest.

Sampling

To test the research question and the corresponding hypotheses two different sampling methods were used; convenience sampling and snowball sampling. Because of the limited amount of time, participants were chosen who were widely available and close at hand

(convenience sampling). The participants were asked to send the survey to friends/colleagues etcetera to create a snowball effect. Unfortunately, the use of non-probability sampling means the external validity is threatened and the generalizability to the entire population cannot be ensured, but in the end, it is a fast way to gain participants in a short amount of time. That is the main reason why these ways of sampling were chosen.

Procedure

The survey was created and distributed via the online survey program Qualtrics. The participants could receive a link through different online channels, like email and Facebook. This means that the participants could fill in the survey in their own habitat. In this way, people are less tended to fill in social desirable answers, because researchers do not surround them. On the other hand, the participants are also less motivated to fill in the complete questionnaire, so the drop-out rate could be higher with this type of distribution.

The survey started with a short introduction, where they started with thanking the participants for participating on this research. This was followed by a short introduction of the researcher and the topic of this thesis. We also informed the participants about the anonymous processing of the data and pointed out there were no right or wrong answers.

After the introduction, the participants first had to fill in some questions about physical grocery shopping. Firstly, the perceived time pressure was measured during offline grocery

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shopping, after this the participants had to choose between different kinds of brands of a product to measure the brand importance in an offline situation. Different products were chosen to measure the difference between search and experience goods. A price raise of 10% on the branded products was used to measure the price sensitivity. After the offline situation, the participants had to fill in the same questions for online grocery shopping. First, the perceived time pressure in an online situation was measured, after this they had to choose between different kinds of brands of a product to measure the brand importance and the price sensitivity was measured after a price raise of 10% for the branded products. The next paragraph provides a more detailed overview of the chosen measurements of the variables. In the end phase, the overall perceived time pressure of the participants was measured and they had to fill in some socio-demographic questions, like age, gender and education level. The figure below gives an overview of the order of the questionnaire.

All questions were obligatory, excluding the last question, which offered the respondent the option to enter any feedback or comments. The survey remained open for two weeks after it was distributed. Figure 8 Survey Order Introduction Physical Grocery Shopping • Time Pressure • Brand Importance • Price Sensitivity Electronic Grocery Shopping • Time Pressure • Brand Importance • Price Sensitivity Time Pressure Overall Demographics

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Variables

This section gives an explanation of the chosen measurements of the variables. Time pressure, brand importance and price sensitivity are the three different independent variables and purchase intention (online/offline) is the dependent variable on which the influence is determined in this research. It will also explain which products are chosen to represent search and experience goods. Based on the established conceptual model the following variables have been measured:

Time Pressure

Time pressure is measured three times during this survey. First the perceived time pressure during offline shopping was measured, than the perceived online time pressure and in the end the overall perceived time pressure was measured. These subjective measures are useful because understanding how people experience their time is a key factor in understanding how this might affect their well-being.

The perceived time pressure during offline shopping was assessed by five items from a study of Putrevu & Ratchford (1998). All the questions where translated into Dutch, because the whole survey was in Dutch. Each respondent used a 5-point Likert scale to indicate his/her agreement with the statement. A Likert scale is a psychometric scale, which is the most widely used approach to scaling responses in survey research. To measure the perceived time pressure during online shopping the questions the items from Putrevu & Ratchford (1998) where

transformed into questions that matters for online shopping. In appendix 3 you can find the complete survey, which gives an overview of all the questions asked to the participants.

The overall time pressure measure was developed by Reilly (1982), who used this to determine the degree to which participants perceive themselves constrained by a lack of

discretionary time. Reilly (1982) created this scale to measure the role overload by women who had a job outside home. Going-over the content of these 13 items, it reveals that each item concerns with whether the participant has enough time to fulfill obligations. Although it was first created for women, it appears to be appropriate for both men and women. In the table below you can find the Cronbach’s Alpha for the three measurements of time pressure. The Cronbach’s Alpha shows the reliability of a psychometric test for a sample and serves as a measurement of the internal consistency. From this table we can conclude that the three measurements are reliable.

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Table 4

Reliability Time Pressure Measurement

Cronbach’s Alpha N of Items N

Time Pressure Offline 0,814 6 138

Time Pressure Online 0,809 6 133

Time Pressure Overall 0,883 13 128

Brand Importance was measured for four different kinds of products in the survey, respectively for two search goods and for two experience goods. The participants where asked which brand they would buy in an online or offline shopping context. An example of a question is: “Imagine yourself doing your shopping at the supermarket, which brand of margarine would you buy?” The respondents could choose between three different brands of margarine, a

premium brand, a lower priced-premium brand and a generic brand. The more people chose for a premium brand, the higher the brand importance is.

To measure the price sensitivity, the results from the survey from Accenture in 2011 were used. This survey indicated that around 20% of the consumers would switch from a branded product to a generic product when the price increases with less than 10 percent. That indicated, that consumers are quite price sensitive when it comes to grocery shopping. In this questionnaire, the participants where asked after the question which brand they would choose, which brand they would choose if the price would increase with 10 percent for the premium brand, and for the lower priced-premium brand, but not for the generic brand. An example of a question is: “Now the prices of margarine A (Becel) and margarine B (Blue Band) increased with 10%, which margarine would you buy now?”. Brand A was a premium brand, Brand B was a lower prices premium brand and Brand C the generic brand.

Search and Experience Goods

As mentioned before we take a look at the possible moderating influences of search and experience goods. Nelson (1970) made a distinction between experience and search goods. A search good refers to a product or service with certain characteristics that is easily to verify before purchase, while this is more difficult with an experience good An experience good has certain subjective attributes that are hard to verify when you cannot touch, smell or taste the product. Two search goods where used in the questionnaire and two experience goods.

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Table 5

Explanation of chosen goods

Type: Product: Why:

Search Good margarine No searchable sensory attributes that affect customers’ perception of quality (Steenkamp, 1986). All product

information can also be mentioned online (like fat content etc.) Toilet Paper Differences between Toilet Paper brand-specific attributes can

be communicated online (like design, layers, size etc.). Experience Good Liquid Detergent This category contains some characteristics that are not as

Easily available online as offline (like scent).

Avocado Fruits and vegetables have in general a large number of sensory attributes. Specifically an avocado needs good inspection to determine its ripeness.

Figure 9.

Conceptualization of Type of Goods

Purchase Intention Online/Offline

To measure the purchase intention of the participants in an online and offline situation, just two simple questions were asked. “How likely is it that you would go to the supermarket?” to measure the purchase intention in an offline shopping environment and “How likely is it that you order groceries online?” to measure the purchase intention in an online shopping

environment. An additional of two questions were asked to measure the attitude of the consumers to online and offline shopping.

Experience Good Search Good Margarine margarine Toilet Paper Liquid Detergent Avocado Type of Good

Online grocery shopping : an empirical study looking at the influences of price sensitivity, time pressure and brand importance on consumers’ purchase intention when comparing electronic grocery shopping to physical gro

Master Thesis