Author: indiafreenotes

Need Recognition

In an E-commerce environment, the starting point of the consumer buying decision process is to arouse demand. In addition to the internal and external stimulus in the traditional market, the stimulus of Internet consumers is more from the Internet, which is mainly reflected in the following aspects. One is the network media, which releases a variety of information directly or indirectly affecting the consumer’s demand confirmation.

The second is an online community, where Internet users share their shopping experience in virtual communities such as forums and post bars, as well as product placement in some communities. The third one is the marketing activities of online enterprises, such as online advertising, online bidding and auction and online public relations activities, which are stimulating the desire of consumers to buy. After being stimulated by internal and external factors, consumers will feel that there is a certain gap between their desired and actual needs. If they have a certain purchasing power, they will have a corresponding consumption demand, and in the Ecommerce environment, consumers will have some new demands. The first demand is the interest, which refers to the tendency of people to engage in online activities out of curiosity and the satisfaction of being successful.

The second is personality display, the need for people to use the Internet to show their unique ideas. The last one is gathering communication, and that is consumers want opportunities to come together and interact with others who have similar experiences.

Information Search

Once consumers are aware of a need and are motivated to purchase a particular product or service, they often start searching for the information they need to make decisions in a variety of ways. When shopping online, consumers can use search engines to make a comparison of shopping websites, shopping forums and other tools to effectively collect information, which is more convenient, fast and comprehensive than traditional information collection. Although E-commerce has greatly improved the efficiency of information search and changed the purchasing behavior of consumers, consumers still show high or low enthusiasm in collecting information under the influence of the following factors:

The first factor is product knowledge, which refers to consumers’ understanding of products. Generally speaking, consumers hardly need the information to search for the products they are familiar with or often buy. They make decisions mainly based on experience, and they have a strong search intention when they buy new products. The second factor is product value. Search intention of consumers usually with a positive relationship with the value of the purchased products. For products with low risk and low value, consumers make decisions mainly based on experience, and information search is rarely required. When consumers buy products of high value, information collection becomes particularly important because they are concerned about information asymmetry and greater risks. Therefore, information collection becomes particularly important. The third factor is time stress.

Because gathering information takes a lot of time and effort, consumers’ search intentions are lower when decisions need to be made quickly in a short period of time. The last factor is involvement degree, which refers to how much time and energy consumers are willing to spend in the purchase process. For some complex purchases, most consumers know little about them, so they will spend a certain amount of time collecting information and make multi-faceted selections and comparisons.

Evaluating of Alternative

When consumers get relevant information from different channels, they will analyze and compare various products to choose the most suitable products and services. When consumers choose goods, they will compare the functions, styles, and reliability, prices and aftersales services of similar goods according to a certain evaluation standard. The evaluation and comparison results are based on consumers’ utility value.

For online consumers, the use of the Internet not only greatly facilitates their search for commodity information, but also various comparison shopping websites provide detailed commodity information to help them make a choice as soon as possible.

Purchase Decision

Through choice and judgment, consumers will form their preference or purchase intention for a certain commodity. However, in the process of transformation into actual purchase behavior, it is also affected by the attitude of others and unexpected circumstances. In the E-commerce environment, the extensive and comprehensive commodity information on the Internet will guide consumers to make rational decisions, reduce the probability of impulse purchase, and make online decision-making faster. In addition, besides the traditional factors such as purchase time, purchase quantity, the way to buy is another important decisionmaking factor, that is, online or offline. Many consumers choose to buy their ideal products in the traditional market after collecting information and selecting and evaluating them through the network. The main reason is that consumers will take the following factors into consideration. First, price is still the most sensitive factor for consumers in online shopping. Only when online goods have a greater price advantage compared with the traditional market will consumers be inclined to choose online shopping. Second, risks are factors that need to be considered, mainly including payment risks and privacy risks. Because online shopping usually has to carry on the membership registration, and through online payment and other forms to buy goods. It usually needs to pay in advance to receive goods.

As a result, consumers will worry about their personal information being maliciously stolen, or the risk of account password theft due to Trojan horses and other viruses. Third, trust including the trust of product information on the network and the trust of various promises made by enterprises is another factor.

Post-purchase Behavior

After buying a product, online consumers often compare the actual properties of the product they feel with the expectation of the product to judge the correctness of their purchase decisions and guide the next purchase. If the product performance exceeds expectations, consumers will feel very satisfied; If the actual performance of the product is roughly in line with the expectations, the consumer will feel basically satisfied; If the performance of the product does not meet expectations, consumers will feel disappointed and dissatisfied. Moreover, consumers tend to talk about their feelings to their relatives and friends around them, which further expands the influence of online consumers’ postpurchase feelings. When consumers post relevant comments through various channels such as online forums, QQ groups, virtual communities, blogs, etc., it will even affect the purchase decision behavior of strangers. And the major factors that influence consumer post-purchase satisfaction can be attributed to the following four points. The first point is corporate image and commitment. Generally speaking, an enterprise with a good corporate image and commitment will have high expectations from customers. Therefore, online retailers must act according to their capabilities when making relevant promises, otherwise it is easy to make consumers feel disappointed and reduce their satisfaction. The second point is consumption experience, a kind of overall feeling of consumers in the process of online buying, including the perception of some services provided by network performance merchants, etc. A positive consumption experience will further enhance the satisfaction of consumers. The third point is after-sales service. Whether the return process is convenient, quick and thoughtful will affect customers’ evaluation of purchasing. The last point is safety and reliability. As mentioned above, customers’ consideration of website security performance is an important factor hindering consumers from online shopping. Therefore, most consumers do not have high requirements for it. When enterprises strengthen their security system to reduce customers’ risk perception, customer satisfaction will be greatly improved.

Online Buying Behaviour refers to the process through which consumers search for information, evaluate products, compare alternatives, make purchasing decisions, complete transactions, and share post-purchase experiences through digital platforms. It includes activities performed on websites, mobile applications, online marketplaces, social media platforms, and other digital channels.

Online consumers typically begin by recognizing a need and searching for relevant information. They compare product features, prices, quality, customer reviews, ratings, delivery options, return policies, and payment methods before making a decision. Convenience, availability, security, personalization, and ease of navigation strongly influence online purchases.

Online buying behaviour is also affected by digital marketing activities such as search advertising, social media campaigns, email marketing, influencer recommendations, online reviews, discounts, and personalized offers. Customers can quickly compare several brands and switch between sellers, making competition more intense.

Characteristics of Online Buying Behaviour in Brand Management

• Convenience-Oriented Behaviour

Online buying behaviour is strongly influenced by convenience. Consumers can search for products, compare alternatives, place orders, make payments, and track deliveries from home or other locations. They do not need to visit physical stores or follow traditional shopping schedules. This convenience encourages consumers to use digital channels regularly. In Brand Management, organizations must therefore provide simple navigation, quick transactions, flexible delivery, and easy returns to create positive experiences and strengthen customer satisfaction, preference, and loyalty.

• Information-Seeking Behaviour

Online consumers usually have access to extensive product information before making purchasing decisions. They may examine descriptions, specifications, photographs, videos, prices, ratings, reviews, and comparisons across multiple platforms. This makes online buyers more informed and capable of evaluating alternatives independently. Brands should provide accurate, complete, and updated information to build credibility. Clear online information reduces uncertainty and helps customers understand product benefits, quality, and value, thereby supporting stronger brand consideration and purchase intention.

• Price Comparison Behaviour

Online platforms make it easy for consumers to compare prices offered by different brands and sellers. Customers can quickly identify discounts, promotional offers, cashback opportunities, delivery charges, and alternative products. As a result, online buyers may become more price and value conscious. Organizations need to communicate their value proposition clearly and maintain appropriate pricing strategies. Offering competitive value rather than relying only on discounts can help brands retain customers and avoid excessive price-based competition.

• Review and Recommendation Driven

Online buyers often rely on customer reviews, ratings, testimonials, recommendations, and social media opinions before purchasing. These forms of social proof can influence perceptions of quality, reliability, service, and value. Positive reviews can increase confidence, while negative feedback may discourage purchases. For Brand Management, monitoring customer feedback is essential. Organizations should respond professionally to complaints, encourage genuine reviews, and provide consistently positive experiences. Strong digital reputation can improve trust, credibility, and brand preference.

• Convenience of Multiple Choices

Online buying environments provide customers with access to a wide variety of brands, products, sellers, and alternatives. Consumers can compare different features, designs, prices, and customer ratings without significant effort. This variety increases customer choice but also makes competition more intense. Brands need distinctive positioning and clear differentiation to attract attention. Providing relevant recommendations, organized product information, and personalized experiences can help customers navigate choices and maintain interest in the brand.

• Personalization and Recommendation

Online buying behaviour is increasingly influenced by personalized experiences. Digital platforms can provide product recommendations, customized offers, targeted advertisements, and content based on customer interests or previous interactions. Relevant personalization can make shopping easier and increase customer engagement. In Brand Management, organizations can use customer insights to create more meaningful digital experiences. However, personalization should be appropriate and transparent. Effective personalization strengthens customer satisfaction, relevance, engagement, purchase intention, and long-term brand relationships.

• Impulsive and Convenience-Based Purchasing

Online environments can encourage unplanned purchases because customers are constantly exposed to recommendations, limited-time offers, discounts, advertisements, and visually attractive product presentations. Easy payment systems and quick checkout processes can reduce barriers to purchase. Mobile notifications and personalized promotions may also encourage spontaneous decisions. Brands can use these opportunities responsibly by presenting relevant offers and simplifying purchasing. However, excessive promotional pressure may reduce trust, so organizations should balance convenience-driven selling with customer value.

• Post-Purchase Digital Interaction

Online buying behaviour continues after the transaction through reviews, ratings, customer support, returns, recommendations, and social media interaction. Customers may share their experiences publicly and influence other potential buyers. This makes post-purchase behaviour an important part of Brand Management. Organizations should provide effective delivery, responsive support, simple return procedures, and opportunities for feedback. Positive post-purchase experiences can strengthen loyalty and advocacy, while negative experiences may quickly damage the brand’s online reputation and customer relationships.

Types of Online Buyers

1. Price-Sensitive Buyers

Price-sensitive buyers carefully compare prices before purchasing products online. They search different websites, marketplaces, and applications for discounts, coupons, cashback, free delivery, and special offers. They are highly aware of competing prices and may switch brands when better value is available. These buyers usually evaluate price together with product quality and benefits. Brands can attract them through competitive pricing, transparent offers, value-based promotions, and loyalty incentives while maintaining satisfactory product quality and service.

2. Convenience-Oriented Buyers

Convenience-oriented buyers choose online shopping because it saves time, effort, and travel. They prefer simple websites, mobile applications, quick checkout, multiple payment options, home delivery, easy returns, and accessible customer support. These consumers value a smooth purchasing process more than spending significant time visiting physical stores. Brands targeting them should reduce unnecessary steps and provide fast, reliable digital experiences. Convenience can significantly influence repeat purchases, customer satisfaction, and long-term relationships with the brand.

3. Information-Seeking Buyers

Information-seeking buyers conduct extensive online research before making purchasing decisions. They examine product descriptions, specifications, photographs, videos, reviews, ratings, comparisons, and expert opinions. These buyers want sufficient information before committing to a purchase and may compare several brands carefully. Organizations should therefore provide accurate, detailed, and easy-to-understand information across digital platforms. Helpful content can reduce uncertainty, build credibility, strengthen trust, and increase the probability that informed customers will choose the brand.

4. Impulse Buyers

Impulse buyers make spontaneous purchasing decisions without extensive prior planning. Attractive product displays, limited-time offers, personalized recommendations, social media content, notifications, discounts, and convenient payment systems can encourage these purchases. Online platforms make impulse buying easier because customers can complete transactions quickly. Brands can influence this segment through attractive presentation and relevant offers. However, excessive promotional pressure may reduce trust. Responsible digital marketing should provide genuine value while creating convenient opportunities for spontaneous purchases.

5. Brand-Loyal Buyers

Brand-loyal buyers repeatedly purchase from brands they already trust and prefer. Their decisions are influenced by previous positive experiences, perceived quality, emotional attachment, familiarity, and confidence in the brand. They may follow brands on social media, participate in loyalty programs, provide positive reviews, and recommend products to others. Organizations should maintain consistent quality, personalize communication, provide exclusive benefits, and create strong digital experiences. Loyal online buyers can become valuable sources of repeat revenue and brand advocacy.

6. Socially Influenced Buyers

Socially influenced buyers are strongly affected by online communities, customer reviews, social media discussions, influencers, recommendations, ratings, and user-generated content. They often consider the experiences and opinions of others before purchasing. Positive social proof can increase confidence, while negative feedback may discourage purchase. Brands can engage these consumers through influencer partnerships, customer testimonials, social media campaigns, and community participation. Authentic communication and positive customer experiences are essential for building credibility with socially influenced online buyers.

7. Mobile-First Buyers

Mobile-first buyers primarily use smartphones or tablets for searching, comparing, purchasing, and interacting with brands. They expect websites and applications to load quickly, provide simple navigation, support secure payments, and offer convenient purchasing features. Mobile notifications, personalized recommendations, location-based offers, and digital wallets may influence their behavior. Organizations should adopt responsive designs and seamless mobile experiences. Meeting mobile expectations can improve customer satisfaction, engagement, conversion rates, and long-term loyalty among these buyers.

8. Deal and Offer Seekers

Deal and offer seekers actively search for promotional opportunities before completing online purchases. They monitor sales events, discount codes, cashback offers, flash sales, free shipping, and special bundles across different platforms. These buyers may subscribe to notifications or compare multiple sellers to identify the most attractive deal. Brands can attract them through timely and relevant promotions while maintaining product value. Creating exclusive digital offers can encourage purchases, although excessive discounting may weaken long-term brand value.

Online Consumer Decision-Making Process

Stage 1. Need Recognition

Need recognition is the first stage of the online consumer decision-making process. Customers identify a problem, requirement, desire, or need that encourages them to consider purchasing a product or service. Online advertisements, social media posts, search results, influencers, recommendations, and changing trends can trigger this need. In Brand Management, companies should create relevant digital communication that connects the brand with customer needs. Effective positioning helps the brand become a potential solution in customers’ minds.

Stage 2. Information Search

After recognizing a need, consumers search online for information about possible products and brands. They may use search engines, websites, social media, online marketplaces, review platforms, videos, blogs, and comparison websites. Customers examine features, prices, quality, availability, ratings, and benefits before proceeding. Brands should provide accurate, accessible, and useful information across digital platforms. Strong search visibility and informative content increase brand recognition, credibility, consideration, and the probability of being included in customers’ choices.

Stage 3. Evaluation of Alternatives

Consumers compare different brands after collecting information. They evaluate alternatives based on price, product quality, features, design, reviews, reputation, convenience, service, and perceived value. Online platforms make comparison easier because customers can examine multiple products within a short period. In Brand Management, organizations should communicate clear points of difference and demonstrate meaningful benefits. Strong positioning, positive reviews, attractive presentation, and credible information can help a brand stand out and influence customers during evaluation.

Stage 4. Brand Consideration and Preference

After evaluating alternatives, consumers develop a consideration set containing brands they are seriously willing to purchase. At this stage, awareness, perceived quality, brand image, reputation, associations, and previous experiences influence preference. Customers may narrow their choices based on trust, value, convenience, or emotional connection. Brand managers should reinforce distinctive benefits and maintain consistent communication. A strong digital presence and positive customer perception increase the likelihood that the brand will become the preferred choice among competing alternatives.

Stage 5. Purchase Decision

The purchase decision occurs when consumers select a particular brand and proceed with the online transaction. Factors such as price, discounts, availability, delivery options, payment security, return policies, reviews, and website experience can influence the final decision. A technically strong product may still lose customers if the purchasing process is complicated. Brand Management should therefore ensure a seamless digital buying journey, trustworthy information, secure payment, transparent policies, and consistent branding to reduce hesitation and encourage conversion.

Stage 6. Online Purchase and Transaction Experience

The actual transaction experience is an important part of the decision-making process. Consumers expect easy navigation, quick checkout, multiple payment options, secure transactions, accurate order information, and reliable confirmation. Problems such as payment failure, unclear charges, complicated forms, or unavailable products can negatively affect the brand. Organizations should optimize the online purchasing process and provide immediate support when problems occur. A smooth transaction strengthens customer confidence and contributes positively to the overall brand experience.

Stage 7. Post-Purchase Evaluation

After receiving and using the product, customers compare their actual experience with their expectations. They evaluate product quality, performance, delivery, packaging, customer support, and overall value. Satisfaction can lead to repeat purchases, positive reviews, recommendations, and loyalty, while dissatisfaction can result in complaints, negative ratings, and switching. Brand managers should actively collect feedback and provide effective after-sales service. Positive post-purchase experiences strengthen trust and help create favorable long-term brand associations.

Stage 8. Loyalty and Advocacy

The final stage involves developing a continuing relationship with the brand. Satisfied online consumers may repeatedly purchase, subscribe to services, participate in loyalty programs, follow social media accounts, recommend products, and share positive experiences. Some become active brand advocates who influence other customers through reviews and user-generated content. Brand Management should encourage loyalty through consistent quality, personalization, rewards, engagement, and responsive service. Strong customer relationships transform individual online purchases into long-term brand equity and advocacy.

Factors Influencing Online Buying Behaviour in Brand Management

1. Product Quality and Value

Product quality and perceived value strongly influence online buying behaviour. Consumers cannot physically examine products before purchase, so they rely heavily on descriptions, photographs, videos, ratings, reviews, and brand reputation. They evaluate whether the expected benefits justify the price paid. Reliable quality, useful features, durability, and clear product information increase purchase confidence. In Brand Management, organizations should communicate value honestly and ensure that actual product performance matches online promises. Consistent quality can strengthen satisfaction, trust, repeat purchases, and customer loyalty.

2. Price and Promotional Offers

Price is an important factor influencing online purchasing because consumers can quickly compare prices across websites, applications, and marketplaces. Discounts, coupons, cashback, free shipping, flash sales, and personalized offers can strongly affect purchase decisions. However, customers also consider quality, service, convenience, and overall value rather than price alone. Brand managers should maintain transparent pricing and create attractive but sustainable promotional strategies. Excessive discounting may increase short-term sales but can weaken perceived quality and encourage customers to focus primarily on price.

3. Online Reviews and Ratings

Online reviews and ratings significantly influence consumer confidence and purchase intention. Customers often examine comments, star ratings, testimonials, photographs, and videos shared by previous buyers before selecting a brand. Positive reviews can strengthen perceptions of quality, reliability, and service, while repeated negative feedback may discourage purchases. In Brand Management, organizations should monitor online reviews, respond professionally to complaints, and encourage genuine customer feedback. Maintaining a positive digital reputation helps build trust and influences customers during online evaluation.

4. Website and User Experience

Website design and user experience strongly affect online buying behaviour. Consumers expect websites and applications to provide quick loading, simple navigation, clear product information, attractive presentation, and an easy checkout process. Complicated navigation, broken links, slow pages, or unclear information can cause customers to abandon purchases. Brand managers should optimize digital platforms for usability and consistency. A smooth user experience creates positive impressions, reduces purchasing effort, increases conversion opportunities, and strengthens the overall perception of the brand.

5. Trust and Brand Reputation

Trust is particularly important in online purchasing because consumers may have concerns about product authenticity, payment security, delivery, returns, and data protection. A well-known and reputable brand can reduce perceived risk and make customers more comfortable completing transactions. Brand reputation is influenced by product quality, customer service, reviews, communication, and organizational behaviour. Companies should maintain transparency, fulfill promises, provide reliable service, and resolve complaints effectively. Strong trust encourages purchase, repeat business, loyalty, and positive recommendations.

6. Convenience and Delivery Services

Convenience is a major reason consumers choose online shopping. Customers value easy product discovery, simple ordering, multiple payment options, home delivery, order tracking, and flexible return policies. Delivery speed and reliability can also influence brand choice, particularly when products are needed quickly. Brand managers should coordinate digital platforms and logistics services to provide a seamless purchasing experience. Greater convenience reduces customer effort and can improve satisfaction, purchase frequency, customer retention, and overall brand preference.

7. Social Media and Digital Influence

Social media platforms significantly affect online buying behaviour by exposing consumers to advertisements, influencers, product demonstrations, trends, recommendations, and user-generated content. Consumers may discover products through social posts and evaluate them through comments and community discussions. Influencer credibility and social proof can shape perceptions and purchase intention. Brand managers should develop relevant and authentic social media strategies, engage with audiences, and encourage positive interactions. Strong digital engagement can improve awareness, consideration, trust, and customer relationships.

8. Personalization and Customer Engagement

Personalization influences online buying behaviour by providing customers with relevant recommendations, offers, content, and communication based on their interests and previous interactions. Consumers may find personalized experiences more convenient and useful because they reduce the effort required to search through numerous alternatives. Effective engagement through email, applications, loyalty programs, social media, and personalized promotions can strengthen relationships. Organizations should use customer insights responsibly and transparently. Meaningful personalization can improve satisfaction, purchase intention, retention, loyalty, and long-term brand equity.

Strategies for Influencing Online Buying Behaviour

1. Provide Clear Product Information

Organizations can influence online buying behaviour by providing accurate, detailed, and easy-to-understand product information. Product descriptions should explain features, benefits, specifications, dimensions, usage instructions, availability, and pricing clearly. High-quality photographs, videos, demonstrations, and comparison information can further reduce customer uncertainty. When consumers have sufficient information, they can evaluate alternatives confidently and make informed decisions. Clear information strengthens credibility and trust while increasing purchase intention and reducing the likelihood of product abandonment.

2. Optimize Website and Mobile Experience

A smooth website and mobile experience can strongly influence online purchasing decisions. Organizations should ensure fast loading, simple navigation, clear categories, effective search functions, attractive product presentation, and easy checkout. Websites should also work efficiently across different devices, especially smartphones. Complicated processes can frustrate customers and lead to abandoned purchases. A convenient digital experience reduces customer effort, improves satisfaction, and encourages customers to complete transactions. Consistent branding across digital platforms also strengthens recognition and trust.

3. Use Reviews and Social Proof

Customer reviews, ratings, testimonials, user-generated content, and social proof can encourage consumers to purchase online. Potential buyers often look for evidence from previous customers before trusting a product or brand. Organizations should encourage genuine reviews and display relevant ratings prominently. Responding professionally to negative feedback can demonstrate customer commitment. Testimonials, product demonstrations, and real customer experiences can reduce perceived risk and increase confidence. Strong social proof can therefore improve credibility, consideration, purchase intention, and conversion.

4. Offer Competitive Pricing and Promotions

Competitive pricing and promotional strategies can influence customers’ purchase decisions by increasing perceived value. Organizations can provide limited-time offers, discounts, bundles, coupons, cashback, free shipping, or loyalty rewards. Promotional communication should clearly explain the actual benefit and avoid misleading claims. While offers can stimulate immediate purchases, brands should avoid excessive discounting that may weaken perceived quality. Combining attractive pricing with reliable quality, service, and convenience creates stronger value and encourages both first-time and repeat purchases.

5. Personalize Recommendations and Offers

Personalization allows organizations to provide products, content, and offers that match individual customer interests and purchasing behaviour. Personalized recommendations can help customers discover relevant products without searching through numerous alternatives. Organizations can use browsing patterns, previous purchases, preferences, and engagement information to improve relevance. Personalized emails, product suggestions, discounts, and reminders can increase engagement and purchase intention. However, personalization should be transparent and appropriate. Relevant experiences can strengthen customer satisfaction, convenience, loyalty, and brand relationships.

6. Strengthen Digital Advertising and Content

Digital advertising and content marketing can influence customers at different stages of the online buying journey. Organizations can use search advertising, social media advertisements, videos, blogs, guides, product demonstrations, and educational content to create awareness and interest. Content should be relevant, engaging, credible, and focused on customer needs. Retargeting can also remind potential customers about products they previously viewed. Effective digital communication strengthens awareness, consideration, trust, engagement, and ultimately online purchasing behaviour.

7. Simplify Payment, Delivery, and Returns

A simple purchasing process can significantly increase online conversion. Organizations should provide multiple secure payment options, transparent charges, reliable delivery information, order tracking, and clear return or exchange policies. Customers are more likely to complete purchases when they understand what they will receive and how problems will be handled. Reducing uncertainty around payment and delivery improves confidence. Convenient fulfillment and easy returns also contribute to positive customer experiences, repeat purchases, and stronger long-term loyalty.

8. Build Trust and Encourage Engagement

Trust-building and customer engagement are essential for influencing online buying behaviour. Organizations should communicate transparently, protect customer information, provide responsive customer support, and consistently fulfill brand promises. Engagement can be strengthened through social media interaction, online communities, loyalty programs, live chats, contests, and feedback opportunities. Customers who trust and actively interact with a brand are more likely to purchase and recommend it. Strong digital relationships therefore support conversion, retention, advocacy, and sustainable brand equity.

Importance of Online Buying Behaviour in Brand Management

• Helps Understand Customer Needs

Online shopping is being popular among all age groups. There is exponential growth in this kind of market. More online stores are opening, and competition is also becoming higher to sell products. But online marketplaces are building trust and giving convenient opportunities to their buyers. Shopaholics are smarter; they search and compare products before making the final payment. Some people still have fear and don’t like to buy products online, but others are frequent buyers. Over many disadvantages, people are becoming aware of the importance of online shopping, primarily due to the Covid-19 emergency we are facing. Here we are discussing the reasons why online shopping is better.

A recent study of users who have bought products on the Web has three important findings with implications for Web design:

• Convenience and ease of use are the main reasons people buy at websites
• Shoppers only buy 5% of the time they visit e-commerce sites: facilitate product research, cross-shopping, and other non-buying tasks that account for 95% of visits if you want to turn people into loyal users
• E-commerce is going international, with many users buying from foreign sites (this latter conclusion is less true for American customers who mainly buy from domestic sites, but it has profound implications for American vendors who can sell a lot overseas if they bother to serve international customers).

Huge Selection and Variety of Products

Physical stores have limited stock. They only keep those things which are common and most selling. There are many different reasons which affect the availability of other products. The local retailer also tries to sell their limited stock. While online shopping showcase variety from their stock and various stores. 63% of shoppers shop online because you can browse and select products as per your choice and latest trend. You can even buy used products online. Another reason why online shopping is trending is that you will easily find various products on a single platform.

Ease of Buying Attracts Customers

Respondents were asked to list the five most important reasons to shop on the Web. Even though low prices definitely do attract customers, pricing was only the third-most important issue for respondents. Most of the answers were related to making it easy, pleasant, and efficient to buy.

Better Prices with Coupons/Discounts

The purpose of online shopping is not only the availability of a wide range of different products. But they offer a lower price as well. That’s the one reason why do people shop online. There are several options available to compare prices from different stores. Believe nothing problematic at lower prices. E-Retailers only reduce their profit margin to attract customers. They understand the weakness of buyers. Occasionally e-retailers offer discounts on different products and best deals to increase their sale among competitors.

Apart from a retailer’s direct discount, you may use exclusive coupon codes and deals available on coupon sites. For example, Amazon are giants in e-retailing, and most of us buy from this site due to trust and secure transactions. Around 41% of shoppers shop online because of this advantage they get.

Less Stressful

Shopping online significantly saves one of a lot of stress. When you are online, there is no fear of bumping into a crowd or having to join a long queue before you purchase whatever you want to buy. This is so different from going to the supermarket to buy things, most times, you have to get on a queue just to make payment and this can be stressful.

Some locations of some supermarkets are also in top cities where there are many people and each time someone goes out to get things to buy, the road can be very crowded and sometimes one can even be robbed if one is not careful.

No Sales Pressure in Online Shopping

When you visit physical stores, the floor assistants try to lure you into buying more items. Sometimes we go inside the store to buy one thing but return home with additional three or four items, which we later realize are of no use. If the product is not available in your favorite color, then the floor assistant may also convince you for a different color to increase store sales. The purpose of online shopping is to remove this pressure from the customer and make shopping easy. Sometimes when you enter a store, you don’t want to leave it without buying anything. It happens to most of us due to different psychological reasons. These activities and behaviors feel like a pressure to buy unwanted items, and shoppers must not feel so while visiting or leaving a shop. It is why online shopping is preferred by around 39% of shoppers.

Easier to Return Goods and Cancel Orders

Before making your purchase there is the option where you can read up the reviews given by other buyers that have used the product. Reviews go a long way in dictating the way a particular product works, and it can help you select which one fits best for the purpose you desire it to be used for.

Marketer’s, marketing plan is driven by their perception of why and how do consumers behave as they do and how they are likely to respond to the various marketing mix elements. But in reality, in most of the markets, buyers differ enormously in terms of their buying dynamics. So the marketer has got a mammoth task of identifying these complex differences. For, if one were to consider the consumer markets, buyers typically will differ in terms of their age, income, educational levels and geographical locations.

Apart from this, the more fundamental differences will be in terms of their personality, lifestyles and their expectations. Despite these complexities, it is imperative that the marketing manager understands the dynamics of the consumers buying process; otherwise the costs and competitive implications of failing to do so would be very high. Under the marketing approach, organisations were engaged in carrying out market researches to identify the consumer’s underlying needs and develop product or service offerings to match those needs. Apart from a wider product range, the advertising and media managers were required to work on diverse campaigns and be more creative in communicating the product benefits.

Now since the entire marketing efforts are focused on the ‘consumer’, the talking also involves using behavioural terms. In this context, the product or service is positioned to deliver a set of benefits to a specific (defined) segment of consumers. The advertising manager aims at communicating symbols and images to indicate how the brand delivers these benefits and create a favourable attitude towards the brand and thereby induce trial among the customers. It is also possible, through advertising to influence consumers to go for repurchase of products or services.

Implications of Managerial Approach

Managerial perspective on consumer behaviour tends to be more micro and cognitive in nature. The term micro is used because the manager is focusing on the individual consumer his or her attitudes, perceptions and lifestyle and demographic features.

Further, the external factors influence in terms of the reference groups, the family, social class and culture are studied in order to know how they influence the individual consumer. The cognitive nature emphasises on the thought processes of individual consumers and the factors which influence their decision-making processes.

From the marketing manager’s perspective, it is necessary to satisfy the needs of the individual consumer through suitable product or service offerings. Hence, the necessity to gather information on the consumer’s needs, thought processes characteristic features. Such information will be useful in segmenting the target market on the basis of various parameters.

However, the manager has to be vary of a few risks associated with the managerial approach:

• It would not be correct to go by a strictly cognitive approach. This is because, the consumers may not always adopt a systematic decision-making process, especially when purchasing products on impulse or habitual basis (buy toothpaste, tooth brush etc.) Such products have symbolic value and do not require the consumer to be involved in a systematic information processing.
• It would be incorrect to overlook the dynamics of environmental factors influencing the consumers decision-making process. For instance, gifts purchased for ritual purposes would have to be culturally derived. This reason may be overlooked if only a micro view is taken, where the focus is exclusively on the individual consumer.
• Another risk could arise if the managers were to focus more on the purchase aspect rather than on consumption. While trying to work on the consumer satisfaction level managers have realised that this can be understood by looking at the post purchase behaviour or the consumption front and not merely the purchase experience. It is for this reason that marketing managers are entering into relationship based marketing with their consumers. Moreover, to a great extent this relationship marketing will depend on the consumption experience.

Thus, it will be more helpful if the marketers were to adopt a ‘holistic approach’ to the study of consumer behaviour. For this, marketing managers will have to make efforts to understand the environmental context of the consumer’s actions, the cognitive processes involved in their decision-making process and then work out suitable marketing strategies accordingly.

Consumers Perspective on Consumer Behaviour

Above, we have discussed the manager’s perspective on consumer behaviour, now we will try to view it from the consumer’s eye. Both, the managerial and consumer perspectives differ on three accounts.

(a) Managers seek product information so as to come out with product offerings, which will work as vehicles of influences. Whereas, consumers tend to evaluate information for the purpose of making better decisions on purchase choices.

(b) Marketing manager’s workout strategies which are product or brand specific. While the consumers have the tendency to evaluate various brands before actually purchasing products. Further, the consumer’s choice, although may not appear to be related but in reality could be a reflection of their desires and lifestyle. Such behaviour could be visible in their buying food items (eating Pizza, Burgers), wearing Ruf-n-Tuf jeans and Reebok shoes and owning a Blackberry cellular phone could be a reflection of the individual consumer’s lifestyle and desires.

(c) Managers may view competition as a threat. Whereas, for the consumer, availability of more brands (i.e., more competition) will work as an opportunity to compare, have more choices and get a few products at lower prices too.

For managers, study of consumer behaviour will help to offer good quality products and acquire the necessary accurate information to ensure the building up of a loyal customer base in the long-run.

As consumers, the study of consumer behaviour will provide them insights into their own consumption-related decisions and thereby enable them to become better and wiser consumers.

Current trends have indicated that marketers need to be sensitive to the changes in consumer needs, demographic characteristics and lifestyles and develop effective marketing strategies. Evaluation of marketing strategies is more valid because of the greater value orientation on the part of the consumers’ today. They desire for more customised products because of their accessibility to better and more information on products and services.

In order to survive in the highly competitive market, marketers are working towards building customer relationship. The three drivers of successful relationships between marketers and customers are customer value, high levels of customer satisfaction and building a structure of customer retention.

Increased Demand for Transparency

There is an increasing customer demand around transparency. Big corporations have abused the trust of the customer for a long time. We’ve seen many scandals within various industries from food to automotive. That’s the reason why the customers of today require transparency on the supply chain, ingredients, and processes and so on.

Health conscious

Perhaps unsurprisingly, consumers are far more health conscious than before. According to Accenture, health ranked as consumers’ top priority right now. With 80% of surveyed people reporting that the health of their friends and family is at the top of their minds, followed by 78% who were most concerned with their personal health.

After months of increased hand washing, wearing protective masks and isolating indoors, hygiene will remain at the forefront of everyone’s minds. Research from Shekel shows that 87% of US shoppers would now rather shop in stores with touchless self-checkout capabilities.

But it’s not just about the short-term impact of contracting Covid-19. According to Forbes, the global pandemic has caused people to think about ageing. In particular, how they can lead a healthy lifestyle into their old age.

Accelerated Online Buying

Customers will accelerate buying online and using home delivery. This was already happening, but the pandemic revealed to skeptics that it’s easy, it works and it makes their life easier. All businesses will need to have an online strategy or they’re going to get beaten by their competitors that embrace and execute an online sale and marketing strategy.

Community driven

Although the coronavirus crisis has been a time of extreme isolation, it has actually brought communities around the globe together. Just think back to those videos of Italians singing to their neighbours in the height of lockdown, or the weekly applause for carers adopted by countries worldwide.

Nationwide lockdowns have taught people to appreciate the value of those around them, leading to a more selfless way of thinking. Across the world, online community groups have sprung up offering support to neighbours, whether it be through food and medicine delivery services or through online social interaction. These groups are likely to stick around for some time, according to Forbes.

B2B Customers Gaining More Leverage

Business-to-business customers will continue to have more and more leverage with tech vendors from checking authentic reviews to managing the sales cycle on their timeline and even benefiting from group buying pricing. Buying is changing for B2B and it’s a blessing. I encourage customers to have more leverage and power as it will result in a better relationship, less buyer remorse and higher retention.

Flexible first

Of course, while online shopping is set to boom, there’s still the issue of consumers feeling confident in their purchases. After months of living through an ever-changing and, dare we say it, ‘uncertain’ situation, the way consumers make purchasing decisions has changed.

With talk of global recession and further lockdowns, consumers feel nervous about the future and their finances. As a result, they’re struggling to commit to their purchases, especially if there’s an element of risk involved. Research by Global Web Index reveals that 1 in 5 internet users across 20 markets will be looking for more flexible payments options in the coming months.

Increased Demand for Anonymity

Customers will demand more anonymity. Given continued data breaches combined with recent politicization of electronic and social media footprints of private citizens, a new trend will emerge where assurances of security will no longer suffice. Companies will need to accommodate customers who will simply refuse to provide any information beyond what is needed for a particular transaction.

The Base for Carrying Financial Transactions

A savings account can be used to send and receive payments and it serves as a base for all transactions. Every transaction in a saving account can be done either by net banking, debit card, cheque or withdrawal slip. Financial transactions can also be carried out swiftly by using NEFT/RTGS/IMPS facilities.

Individual/Firm/Company

A bank may be a person, firm, or company. A banking company means a company that is in the business of banking.

Dealing in Money

The bank is a financial institution which deals with other people’s money, i.e., the money given by depositors.

Acceptance of Deposit

A bank accepts money from people in deposits that are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.

Giving Advances

A bank lends out the money in loans to those who require it for different purposes.

Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility services and agency services.

Payment and Withdrawal

A bank provides an easy payment and withdrawal facility to its customers in checks and drafts. It also brings bank money into circulation. This money is in the form of checks, drafts, etc.

Profit and Service Orientation

A bank is a profit-seeking institution with having service-oriented approach.

Ever-increasing

Functions Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services, and activities of a bank.

Connecting Link

A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who require money.

Banking Business

A bank’s main activity should be to do banking business that should not be subsidiary to any other business.

Name Identity

A bank should always add the word “bank” to its name to enable people to know that it is a bank and deals in money.

Investment Transactions

We normally have the following two types of investments transactions:

• Cum Dividend or Cum Interest Quotations and
• Ex-Dividend or Ex-Interest Quotations

Cum Dividend or Cum Interest Quotations

Interest and dividend on the fixed investments accrued on regular interval, but payment of those are made only on fixed dates. Dividends are always paid to the persons, who are shareholder at the time of payouts. Suppose a shareholder sold his shares after keeping those shares in his hand up to ten months, then dividends on those shares will be paid to the buyer or we can say, to new shareholder.

So, a seller at the time of selling shares normally charge value of the accrued dividends up to the date of sale, and this is called ‘CUM DIVIDEND” or “CUM INTEREST”. Since, the sale price is inclusive of the value of a share and interest or dividend, therefore at the time of entry in the books of accounts, normal price of share should be booked in the investment account and the value of dividend or interest should be debited to dividend or interest account.

At the time of receiving dividend or interest, dividend or interests account will be credited, debiting cash or bank account. On the other hand, in the books of seller, normal price of the share should be credited to Investment account and the price of accrued dividend or interest should be credited to the dividend or interest account as the case may be.

Accounting Entries: It can be understand through the following table.

On purchase of investment	Investment A/cDr Dividend or Interest A/c To Cash/Bank A/c (Being Investment made)
On receipt of dividend or interest	Cash/Bank A/cDr To Dividend or Interest A/c (Being dividend or interest received)
for Accrued Interest	Accrued Interest A/cDr To Interest A/c (Being interest accrued)

In the Books of Seller

On Sale of investments	Cash/Bank A/cDr To Investment A/c To Dividend or Interest A/c (Being Investment Sold )
On receipt of dividend or Interest	Cash/Bank A/cDr To Dividend or Interest A/c (Being dividend or interest received)

x-Dividend or Ex-Interest Quotations

The buyer of shares when he is quoted ex-dividend is not entitled to receive the payment. It is the interval between the record date and the payment date during which the stock trades without its dividend. Therefore, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock.

Difference between Cum-dividend and Ex-Dividend

Major differences between them are given as:

• Cum interest or dividend prices are inclusive of the interest or dividend accrued at the date of purchase, whereas in case of the ex-dividend, prices are excluding value of the dividend or interest.
• The purchase price is higher than normal purchase price in case of Cum-dividend, whereas purchase price is the real price in case of ex-dividend.
• Nothing is payable additional in case of Cum-Interest, whereas separate amount of the dividend or interest has to be paid in case of the ex-dividend or ex-interest.

Balancing the Investment Account

Difference of debit and credit side of the investment account is Profit or Loss in case where all the investments are sold.

In case where part of the investments are sold and the balance investments stand unsold, it should be carried forward to the next accounting period and remaining balance of the two sides (debit and credit) will represent profit or loss on the sale of investment.

In case where investments are the fixed assets, then the profit or loss will be of capital revenue or capital loss and should be treated accordingly.

Equity Share Accounts

• Bonus Shares: Bonus shares are issued by the profitable companies to the existing shareholders of the company without any additional amount. Purpose of the bonus share is to capitalize reserves of the company. Only number of the shares will be added in face value column, and principle or capital column will remain unchanged.
• Right Shares: Right shares are first offered to the existing shareholders of the company as a matter of the right, hence called as right shares. As per Companies Act, right shares can be issued after two years of the establishment of a company or after one year of first issue.

Investment accounting is the management and analysis of accounts actively involved in investments. Working in this profession allows you to make business investment decisions and choose stocks, bonds and debts that are stable and profitable. Thoroughly exploring the answer to, ‘What is investment accounting?’ can help you learn more about the profession and help you determine whether it is the right career choice. In this article, we discuss what investment accounting is, explore what an investment accountant does, understand their average salary and skills and discover steps to become an investment accountant.

When researching various accounting careers, you might wonder, ‘What is investment accounting?’. Investment accounting is a specialization in the accounting field that analyses and manages investments accounts. While some manage their investments, people with large investment portfolios hire certified investment accountants. Investment accounting involves managing bonds, stocks and other investments for brokerage firms and portfolio managers. Professionals working in investment accounting field are investment accountants who monitor clients’ investments, manage debt investments and keep track of any third-party investment activities.

Common job duties for an investment accountant:

• Monitor client investments: These professionals monitor and maintain the investment of clients and businesses. They understand various rules about managing investments in a particular region.
• Manage debt investment: Debt investment is another key responsibility of investment accountants. When companies or individual wants to invest in stable and predictable options, these professionals prefer debt investments over stocks.
• Track third-party activities: A part of an investment accountant’s job role involves tracking their clients’ investments. Tracking these activities is essential because it affects a client’s financial standing.
• Prepare tax reports: Another critical job duty of an investment accountant is creating tax reports that give details about the company’s investment accounts. So, it is essential to maintain accurate records.
• Analyze investment activities: Employers expect these professionals to analyse the company’s investment activities and make proper recommendations to management personnel.
• Coordinate with others: Investment accountants coordinate and manage every aspect of the general ledger accounting. These professionals interact with other accountants and portfolio managers to manage ledger accounting.
• Ensure compliance: Many organisations rely on these accountants to process taxes and reports that comply with relevant regulations.

Employers expect these professionals who are knowledgeable in bonds, stocks and precious metals like shares and gold, among other forms of investment. It is essential to keep track of the constantly changing investment field to perform their job duties.

If the investor intends to hold an investment to its maturity date (which effectively limits this accounting method to debt instruments) and has the ability to do so, the investment is classified as held to maturity. This investment is initially recorded at cost, with amortization adjustments thereafter to reflect any premium or discount at which it was purchased. The investment may also be written down to reflect any permanent impairments. There is no ongoing adjustment to market value for this type of investment. This approach cannot be applied to equity instruments, since they have no maturity date.

Trading Security

If the investor intends to sell its investment in the short-term for a profit, the investment is classified as a trading security. This investment is initially recorded at cost. At the end of each subsequent accounting period, adjust the recorded investment to its fair value as of the end of the period. Any unrealized holding gains and losses are to be recorded in operating income. This investment can be either a debt or equity instrument.

Available for Sale

An available for sale investment cannot be categorized as a held to maturity or trading security. This investment is initially recorded at cost. At the end of each subsequent accounting period, adjust the recorded investment to its fair value as of the end of the period. Any unrealized holding gains and losses are to be recorded in other comprehensive income until they have been sold.

Equity Method

If the investor has significant operating or financial control over the investee (generally considered being at least a 20% interest), the equity method should be used. This investment is initially recorded at cost. In subsequent periods, the investor recognizes its share of the profits and losses of the investee, after intra-entity profits and losses have been deducted. Also, if the investee issues dividends to the investor, the dividends are deducted from the investor’s investment in the investee.

Realized Gains and Losses

An important concept in the accounting for investments is whether a gain or loss has been realized. A realized gain is achieved by the sale of an investment, as is a realized loss. Conversely, an unrealized gain or loss is associated with a change in the fair value of an investment that is still owned by the investor.

There are other circumstances than the outright sale of an investment that are considered realized losses. When this happens, a realized loss is recognized in the income statement and the carrying amount of the investment is written down by a corresponding amount. For example, when there is a permanent loss on a held security, the entire amount of the loss is considered a realized loss, and is written off. A permanent loss is typically related to the bankruptcy or liquidity problems of an investee.

An unrealized gain or loss is not subject to immediate taxation. This gain or loss is only recognized for tax purposes when it is realized through the sale of the underlying security. This means that there may be a difference between the tax basis of securities and their carrying amount in the accounting records of the investor, which is considered a temporary difference.