Information Search, the Internet and Consumer Behavior

A tutorial by

Theo Williams 

 

Introduction

Over the last decade or so the face of our world has been drastically altered by the explosion of the Internet.  There is a wealth of product information at the tips of almost 183 million people on-line in the U.S. and Canada as of 2002 as estimated by one study (Hawkins et al).  This new and exciting way to achieve information has had drastic effects on the way consumers search for information and in turn behave.  “Today more than ever, information is increasingly important in the lives of people around the world. The Internet, in particular, has transformed how goods and services are bought and sold between consumers, between businesses and consumers, and between businesses” (Baye). In this tutorial, I’m going to try and explain how the Internet has influenced both information search and consumer behavior.  I hope you enjoy.

 

Explanation of Topic

I know it’s hard to believe, but once upon a time, a person seeking product information had to go into the different stores to compare.  As we all know, that time is not now.  If a consumer wants product information, they are no longer forced to travel from store to store in search of product information. Today, just a few mouse clicks can enable the consumer to look for a variety of product information. There are even sites on the Internet specifically developed to assist consumers in their search for product information.  For example Consumer World is a web site that proudly proclaims itself as being “a public service, non-commercial, guide with over 2000 of the best consumer resources” (www.consumerworld.org). The Internet has been described as an electronic marketplace, further defined by some experts as an "interorganizational information system that allows the participating buyers and sellers ... to exchange information about prices and product offerings" (Ratchford).  This basically means that the Internet acts like a large meeting ground were individuals and businesses display their products, and information associated with those products, and others use that information to buy and compare those products.  

This new availability of information is being put to good use by consumers.  One can always hear from friends how they got this or that product cheap online.  (Well, maybe you haven’t experienced this phenomenon yet; if you haven’t you are one of the few.)  The fact is that having access to the Internet and the information it provides allows consumers an increased opportunity to collect product information, compared to those individuals without access to the Internet.  A study showed that people without access to the Internet ended up paying around 16% more for electronic items than people with Internet access (Baye).  What I get out of this is that ever since the advent of the Internet, individuals who might not go search multiple outlets to obtain price information can now do so using the Internet.  These Internet-literate consumers are now equal to or more informed than individuals who actually went from store to store, comparing product features.  Not only does it take less effort, but it also takes less time. 

Now I’m not trying to say the Internet is a fix all to all your consumer problems.  Even with all the information out there, it will do you absolutely no good as a consumer if you don’t know how to interpret it.  The Internet has been described as a “new technology that makes some things simpler, cheaper, and easier” (Stewart). It is a new tool that allows businesses to consult with consumers and vice versa.  Technically the Internet is still relatively new, so as has always been the case, BUYER BEWARE!  According to many experts, there are many scams and incidents of misinformation out there,  both in the online and offline world (Pack).  But that’s when sites like www.shopper.com and www.consumer.org come in useful.  Sites like these help to level the online playing field for consumers by providing the information that consumers need and want.

Ok, I know what you’re thinking - you’re wondering something like "if getting your product information off of the Internet is so easy, then why doesn’t everyone do it that way?"  Well, my curious friend, it has to do with the benefits that consumers perceive that they will receive from collecting the information.  The perceived benefits of using the Internet as an information source must be “balanced against waiting time, skill at using the Internet compared to alternative sources, and the need to access a computer (Talukdar).  In other words, if the benefits don’t outweigh the cost of collecting the information then it’s a definite no-go.  Luckily, in my research I found a good model that illustrates this relationship. 

“Consider the example of a computer-literate subscriber to Consumer Reports who is searching for a car and has a copy of the magazine's auto issue in the family room. It might be easier (less costly) to use this than to go to the computer, turn it on, wait for it to come up, dial an Internet service provider, access the Consumer Reports site, possibly sign up for an on-line subscription, and search around the site for the desired information. While the Internet would provide more information, it would also be more costly in terms of access time, and thus the Internet might not be the best choice even for a savvy computer user. Conversely, the Internet would have a great advantage for the user if it was necessary to go to a library to find Consumer Reports. The choice of the Internet over competing sources will depend on the perceived costs and benefits of the alternative sources” (Talukdar).

     Ok, so what have we learned?  Well for starters, the Internet acts as a large marketplace for buyers, sellers and those just seeking product information.  We also learned that there are sites specifically designed to assist consumers with product information.  In we talked about the relationship between the costs and benefits of information search on the Internet.