Analysis of Clothing Websites for Young Customer Retention based on A Model of Customer Relationship Management via the Internet by Yoo-Kyoung Seock Dissertation submitted to the Faculty of the Virginia Polytechnic Institute and State University in Partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY IN CLOTHING AND TEXTILES APPROVED: _________________________ Marjorie J. T. Norton, Chair Clothing and Textiles _____________________________ _____________________________ Jessie H. Chen-Yu Valerie L. Giddings Clothing and Textiles Clothing and Textiles _____________________________ _____________________________ James E. Littlefield Kusum Singh Marketing Educational Leadership and Policy Studies July 31, 2003 Blacksburg, Virginia Key words: Internet clothing website, attitude, information search intention, purchase intention Copyright 2003, Yoo-Kyoung Seock Analysis of Clothing Websites for Young Customer Retention based on A Model of Customer Relationship Management via the Internet by Yoo-Kyoung Seock Marjorie J. T. Norton, Chair Clothing and Textiles (Abstract) In today’s era of intense competition for acquiring and retaining customers, customer retention has become a major issue and a key objective in modern retailing. With the emergence of new information technologies, the Internet offers new possibilities for customer retention through the management of relationships between marketers and consumers. Little empirical research has addressed the role of Internet websites in retaining customers for particular brands or at particular stores. The purpose of this research was to determine the effects of the attitudes of a sample of young consumers aged 18 to 22 toward their favorite websites on intentions to purchase through the Internet and channels other than Internet clothing websites. The data were collected using an online survey with a structured questionnaire. The subjects of the study were 414 male and female undergraduate and graduate students at Virginia Tech and The Ohio State University, who were aged 18 to 22 and non-married. Several hypotheses were put forward and results except for one hypothesis were supported. Factor analysis, cluster analysis, factorial MANOVA, canonical correlation analysis, multiple regression, path analysis, and t-tests were employed to test the research hypotheses on the relationships among the variables. The factorial MANOVA results showed that shopping orientation and previous online shopping experience affected the evaluation of general clothing website characteristics, as well as the evaluation of favorite clothing websites. The canonical correlation results revealed that the product information, customer service, and navigation factors represented the favorite clothing website characteristics and were well predicted by the same constructs of the general clothing website characteristics. The path analysis revealed that attitudes toward favorite clothing websites were positively related to intentions to search for information at favorite clothing websites, and that intentions to search for information at those websites were positively related to intentions to purchase from those websites as well as from channels other than Internet clothing websites. Attitudes toward favorite clothing websites were directly and positively related to intentions to purchase clothing items from favorite clothing websites, and were not directly related to intentions to purchase clothing items from channels other than Internet clothing websites. The results also showed that shopping orientation affected intentions to search for information on one hand, and intentions to purchase clothing items from favorite clothing websites on the other. The online information search and purchase groups were significantly different in their intentions to purchase clothing items from their favorite clothing websites. From the results of the present research, it is concluded that Internet websites play a pivotal role in forming consumers’ attitude toward the websites, which eventually lead to their information search and purchase intention from the websites. In addition, consumers’ online information search intentions influence their purchase intention at channels other than Internet. Thus, by establishing effective websites, marketers can retain their customers through multiple channels including the Internet, brick-and-mortar stores, and catalogs. iii Table of Contents Chapter I. Introduction………………………………………………………………. 1 Background………………………………………………………………………. 2 The Problem…………………………………………………………………..….. 4 Justification…………………………………………………………….……….…8 Research Objectives………………………………………………………….....…8 Chapter II. Review of Literature….…………………………………………........… 11 Overview of In-home Shopping………………………………………………......11 E-commerce and the Internet shopping………………………………..…... 16 Theoretical Background on Relationship Marketing...……………………….….. 17 Management of Customer Relationships through the Internet……………...18 Internet Website Storefront Attributes…………………………………………… 23 Attitude Theory and Related Research……………………………………………28 Information Search in Interactive Consumer Behavior………………………….. 30 Consumer Characteristics………………………………………………………... 33 Shopping Orientation………………………………………………………. 34 Previous Online Shopping and Purchasing Experience……………………. 40 Age…………………………………………………………………………. 41 Chapter III. Setting of the Research Problem……………….……………………... 45 Purpose Statement………………………………………………………………... 45 Research Objectives……………………………………………………………… 45 Conceptual Framework…………………………………………………………... 47 Clothing Shopping Orientation and Related Variables…..………………… 47 Previous Online Shopping/Purchasing Experience and Related Variables... 49 Attitude…………………………………………………………………….. 50 Attitude-Information Search-Purchase Intention Relationship…………….. 51 Purchase Intention………………………………………………………….. 53 Conceptual Definitions…………………………………………………………... 54 Research Hypotheses…………………………………………………………….. 55 Limitations……………………………………………………………………….. 61 Assumptions……………………………………………………………………… 62 Chapter IV. Research Procedure……….…………………………………………... 63 Instrument Development…………………………………………………………. 63 Demographics…………………………………………………………….... 63 Clothing Shopping Orientation…………………………………………….. 64 Previous Online Shopping and Purchasing Experience……………………. 64 Clothing Website Characteristics...………………………………………… 65 iv Evaluation of Relative Importance of Apparel Website Attributes ........ 65 Perception of Favorite Apparel Website Attributes………………......... 65 Intentions and Previous Experience with Favorite Clothing Websites…….. 66 Previous Experience with Favorite Clothing Websites………………... 66 Intentions ……………………………………………………………….67 Pilot Testing………………………………………………………………... 67 Sampling Procedures and Questionnaire Administration………………….. 68 Reliability and Validity of the Instrument……………………………………….. 70 Data Analysis…………………………………………………………………….. 72 Null Hypotheses……………………………………………………………. 74 Chapter V. Research Results and Discussion………………………………………. 80 Return Rate for the Survey………………………………………………………..80 Demographic Profile of the Respondents………………………………………... 82 Instrument Reliability……………………………………………………………..84 Preliminary Analysis of Measured Variables……………………………………. 85 Factor Analysis…………………………………………………………….. 85 Clothing Shopping Orientation………………………………………… 86 Clothing Website Characteristics………………………………….........90 Mean Ratings and Standard Deviations of the Variables...............................95 Clothing Shopping Orientation……………………………………........ 95 Clothing Website Characteristics………………………………………. 97 Additional Variables……………………………………………….........99 Pearson Correlations of Measured Variables…………………………….....100 Correlation Coefficients for Clothing Shopping Orientation . Constructs...………………………………………………………….… 100 Correlation Coefficients for Clothing Website Characteristics Constructs..…………………………………………………………….. 102 Cluster Analysis of Shopping Orientation..................................................... 104 Results and Discussion of the Hypothesis Testing………………………………. 109 Hypothesis 1.................................................................................................. 109 Tests of Factorial MANOVA Assumptions……………………………. 111 Factorial MANOVA for Hypothesis 1..................................................... 111 Hypothesis 2.................................................................................................. 114 Tests of Factorial MANOVA Assumptions............................................. 114 Factorial MANOVA for Hypothesis 2.................................................... 115 Hypothesis 3.................................................................................................. 118 Tests of Canonical Correlation Assumptions.......................................... 119 Canonical Correlation Analysis for Hypothesis 3................................... 119 Hypothesis 4, 5, 6, 7 and 8............................................................................. 129 Path Model 1............................................................................................ 131 Path Model 2............................................................................................ 134 Hypothesis 9...................................................................................................138 Tests of Regression Assumptions............................................................ 138 Multicollinearity Diagnostics...................................................................139 v Multiple Regression Analysis for Hypothesis 9...................................... 139 Hypothesis 10.................................................................................................141 Test of Regression Assumptions.............................................................. 142 Multicollinearity Diagnostics...................................................................142 Multiple Regression Analysis for Hypothesis 10.................................... 143 Hypothesis 11................................................................................................ 146 Test of T-test Assumptions...................................................................... 146 T-test for Hypothesis 11...........................................................................146 Additional Analysis of Interest……………………………………………………........ 149 Comparison of Respondents with and without Favorite Clothing Websites on Shopping Orientation and Clothing Websites Characteristics................................ 149 Test of T-test Assumption.............................................................................. 149 T-test for Clothing Shopping Orientation Constructs.................................... 150 T-test for General Clothing Websites Characteristics Constructs................. 152 Relationship between Clothing Shopping Orientation and Intention to Purchase from Channels other than the Internet………………..............…....................….. 153 Test of Regression Assumptions...............................……............................. 154 Multicollinearity Diagnostics…………….....................................................154 Multiple Regression Analysis........................................................................ 155 Relationship between Online Shopping Experience and Intention to purchase from Channels other than the Internet……………………………………...……. 156 Tests of T-test Assumption............................................................................ 156 T-test for the Relationship............................................................................. 157 Chapter VI. Summary, Conclusions and Discussion................................................. 159 Summary................................................................................................................. 159 Conclusions and Implications…………………………………………………..... 162 Suggestions for Future Study…………………………………………………….. 171 References...…...……………………………………………………………………… 175 Appendix A: Permission for Using Published Model………………………………. 190 Appendix B: Human Subject Approval……………………………………………... 192 Appendix C: Questionnaire for Pilot Test…………………………………………... 194 Appendix D: Online Questionnaire and Cover Letter............................................... 200 Appendix E: Tables on Item Deleted for Clothing Website Characteristics, Frequencies of Responses, MANOVA Cell-level Effects and Regression Diagnostics………………………………........................... 208 Appendix F: Vita……...………………………………………………………………. 219 vi List of Tables Table 1. Response Rates for the Online Survey…………………………………….. 81 Table 2. Demographic Profile of Overall Sample…………………………………... 83 Table 3. Cronbach’s Alpha Coefficients…………………………………………….. 84 Table 4. Factor Analysis Results: Clothing Shopping Orientation Constructs…….... 88 Table 5. Factor Analysis Results: Favorite and General Clothing Website Characteristics Constructs………………………………………………….. 92 Table 6. Means and Standard Deviations for Shopping Orientation Constructs......... 96 Table 7. Means and Standard Deviations for Clothing Website Characteristics Constructs………………………….............................................................. 98 Table 8. Means and Standard Deviation of Additional Variables…………………... 100 Table 9. Pearson Correlation Coefficients for the Shopping Orientation Constructs.. 101 Table 10. Pearson Correlation Coefficients for the Clothing Website Characteristics Constructs………………………………………………………………...... 103 Table 11. Hierarchical Cluster Analysis Results: The Agglomeration Coefficients…. 106 Table 12. K-means Cluster Analysis Results: ANOVA Table of Shopping Orientation Clusters.……………………………………………………...... 107 Table 13. K-means Cluster Analysis Results: Final Cluster Centers by Shopping Orientation Factors within Clusters……………………………………....... 108 Table 14. Factorial MANOVA Results: Differences between the Independent Variable Groups in Evaluations of Relative Importance of General Clothing Website Characteristics…….…………………………………...... 113 Table 15. Factorial MANOVA Results: Differences between the Independent Variable Groups in Perception of Favorite Clothing Website Characteristics.………………………………...…………………………… 116 Table 16. Cell Means for Evaluation of Favorite Clothing Websites………………… 117 Table 17. Canonical Correlation Analysis Results for Hypothesis 3: Function One…. 121 Table 18. Canonical Correlation Results for Hypothesis 3: Function Two…………... 122 Table 19. Canonical Correlation Results for Hypothesis 3: Function Three…………. 123 Table 20. Canonical Correlation Results for Hypothesis 3: Function Four…………... 124 Table 21. Canonical Correlation Results for Hypothesis 3: Function Five…………... 125 Table 22. Sensitivity Analysis of the Canonical Correlation Results with Deletion of Selected Independent Variables………………………..………………... 127 Table 23. Path Analysis Results: Relationship of Attitude toward Favorite Clothing Websites and Intention to Search for Information at, and to Purchase, from Favorite Clothing Websites……………………………………………........ 131 Table 24. Path Analysis Results: Relationship of Attitude toward Favorite Clothing Websites to Intention to Search for Information at Favorite Clothing Websites and to Purchase from Channels Other than the Internet................. 135 Table 25. Multiple Regression Analysis Results for Hypothesis 9: Relationship of Attitude toward Favorite Clothing Websites to Intention to Search for Information at favorite Clothing Websites and to Purchase from Such Websites…………………………………………………............................. 140 vii Table 26. Multiple Regression Analysis Results for Hypothesis 10: Relationships between Intention to Purchase from Favorite Clothing Websites and the Clothing Shopping Orientation Constructs……………....144 Table 27. T-test Result for Hypothesis 11: Group Differences in Intention to Purchase Clothing Items from Favorite Clothing Websites………….......... 147 Table 28. Hypothesized Relationships and Summary of the Results………................ 148 Table 29. T-test Comparison of Respondents with and without Favorite Clothing Websites: Clothing Shopping Orientation Constructs................................... 151 Table 30. T-test Comparison for Respondents with and without Favorite Clothing Websites: Clothing Websites Characteristics Constructs………………...... 153 Table 31. Multiple Regression Analysis: Relationships between Clothing Shopping Orientation Constructs and Intention to Purchase from Channels other than the Internet……..…………………………………………................... 156 Table 32. T-test results: Differences between the Online Information Search and Purchase Groups in Intention to Purchase Clothing Items from Channels other than the Internet Clothing Websites……………................................. 157 Table 33. Deleted Items of General and Favorite Clothing Website Characteristics.... 209 Table 34. Frequencies of Responses for Shopping Orientation..................................... 210 Table 35. Frequencies of Responses for Evaluation of General Clothing Websites..... 211 Table 36. Frequencies of Responses for Perception of Favorite Clothing Websites..... 212 Table 37. Frequencies of Responses for Previous Online Shopping and Purchasing Experience...................................................................................................... 213 Table 38. Frequencies of Responses for Intentions....................................................... 213 Table 39. Cell Level Effects for Perception of Favorite Clothing Websites’ Product Information Construct................….................................................. 214 Table 40. Cell Level Effects for Perception of Favorite Clothing Websites’ Customer Service Construct.......................................................................... 214 Table 41. Cell Level Effects for Perception of Favorite Clothing Websites’ Privacy/Security Construct............................................................................ 215 Table 42. Cell Level Effects for Perception of Favorite Clothing Websites’ Navigation Construct..................................................................................... 215 Table 43. Cell Level Effects for Perception of Favorite Clothing Websites’ Sensory Experience Construct..............……................................................. 216 Table 44. Collinearity Diagnostics for Hypothesis 9..................................................... 217 Table 45. Collinearity Diagnostics for Hypothesis 10................................................... 218 viii List of Figures Figure 1. Building Blocks of the Management of Customer Relationship in Business Media – Approach……………………………………………….. 20 Figure 2. Conceptual Framework…………………………………………………...... 48 Figure 3. Proposed Research Hypotheses……………………………………………..56 Figure 4. Canonical Correlation Analysis Results: Significant Relationships between Characteristics Viewed as Important for Clothing Websites in General and Those Provided by Favorite Clothing Websites…….………... 128 Figure 5. Path-analytic model 1: Relationship of Attitude toward Favorite Clothing Websites to Intention to Search for Information at, and to Purchase from, Favorite Clothing Websites...……………………………………………..... 133 Figure 6. Path-analytic model 2: Relationship of Attitude toward Favorite Clothing Websites to Information Search Intention at Favorite Clothing Websites and Intention to Purchase from Channels other than the Internet………….. 136 Figure 7. The Multiple Regression Model in Hypothesis 9: Relationship between Clothing Shopping Orientation Constructs and Intention to Information Search for Information at Favorite Clothing Websites…………………….. 141 Figure 8. Multiple Regression Model for Hypothesis 10: Relationship between Clothing Shopping Orientation Constructs and Intention to Purchase from Favorite Clothing Websites………..……………………………………….. 145 ix CHAPTER I INTRODUCTION As consumers’ demands for products and services become more diversified, and their shopping and purchasing behavior changes with the expanded number of vendors available to them via the Internet and other means (Korner & Zimmermann, 2000), marketers will find it increasingly challenging to acquire and keep customers. In today’s era of intense competition for acquiring and retaining customers, one of the main marketing issues facing many companies is the need to focus business activities on the consumer; however, customer acquisition is expensive. According to Rosenberg and Crepiel (1984), the cost to attract a new customer can be as much as six times the cost to keep a current one. A number of researchers indicate that customer loyalty is a key ingredient of firms’ profitability due to the high cost of acquiring new customers (Reichheld & Sasser, 1990; Srinivasan, Anderson, & Ponnavolu, 2002). It is not surprising, therefore, that customer retention and the management of relationships with customers have become a major issue and a key objective in modern retailing. Since the emergence of new information technologies, such as the World Wide Web, customer-focused business activities have attracted researchers’ and marketers’ attention, along with the application of traditional marketing concepts to e-commerce. The Internet provides new types of intermediaries between businesses and consumers, such as the interface through web sites. Through the Internet, consumers can access information to help them find the services and products they want. Consumers can access data, products and services from around the world in their homes or offices (Korner & Zimmermann, 2000). They either browse the Internet to retrieve the latest information about products and services, or they buy or trade goods. By also allowing distantly separated consumers to interact directly with each other, the Internet provides a feasible way for individuals and companies to buy, sell or trade products and services 1