Internet Research


Growth of Consumers on the Internet

The Internet is highly used as a social and personal outlet.  The World Bank calculates that slightly less than 80% of the population of the United States is active Internet users (World Bank, 2009).  The Internet has several functions identified in research including (a) a means to communicate with others, (b) a means of finding entertainment, (c) a means of acquiring information, and (d) a means of shopping (Kwon, 2003).  The Internet enables consumers to search for product information from companies around the world.  As more customers rely on the Internet for their daily transactions, analysis of Internet shopping usage is essential for businesses (Aaker, Kumar, & Day, 2007).

There are several advantages for consumers that use the Internet for product and service information search, including the speed and efficiency where large amounts of information are easily accessible (Hawkins & Mothersbaugh, 2010).  With the Internet, consumers can search for products and compare products and services, compare prices, and purchase products and services at their convenience.  Consumers are not limited by the choices and prices of businesses that are geographically close.

Internet and Business

The Internet offers many benefits to businesses.  One benefit is that a business’s Internet presence can be accessed by consumers at any time.  The Internet can also help small businesses compete against larger competition due to the low cost of constructing a website (Aaker, Kumar, & Day, 2007).  A website is at the center of many companies’ Internet presence.  A website can be developed as an informational marketing tool or can be configured to facilitate sales directly, through a virtual storefront.  Marketing on the Internet requires an understanding of how information, entertainment, and commerce are combined together (Simmons, 2007).  To create traffic (visitors) to a website there are a variety of methods.

One method of creating website traffic is through information search on search engines.  The top three search engines used in the United States are Google, Yahoo, and Bing (Stat Counter Global Stats, 2012).  With search engines a consumer enters a search term, such as “gourmet coffee” and a listing of possible websites then appears.  The consumer then clicks on a link going to a business’s website.  This type of advertising, where consumers go to a site based on information that they searched for, is pull advertising.  This is the opposite of push advertising, such as email or banner advertising, where the consumer is sent an email and asked to click on the link.  In pull advertising, the consumer seeks out the information.  A consumer who searches for something on the Internet is more likely to purchase a product than a consumer that is brought to the website through push forms of advertising (Brettel & Spilker-Attig, 2010).  Consumers prefer to search on their own for the desired product information and price offers (Brettel & Spilker-Attig, 2010).  Blogs, social networks, and search engines allow consumers to find companies and then are pulled to websites based on information searches.

If consumers are searching for information, a company website is often the point of contact to learn more information.  Company websites can serve many purposes.  There are many advertising and marketing functions of websites.  Corporate websites fulfill many functions of corporate advertising (Hwang, McMillan, & Lee, 2003).  Websites can act as persuasive communication (Hong, 2006).  Using persuasive communication, a company tries to influence consumer behavior through messages (The Society of the Study of Artificial Intelligence and the Simulation of Behavior, 2009).  Beyond use as a method to facilitate communication of advertising content, companies also can use websites for relationship marketing through online communication, feedback, and customer service (Patsioura, Malama, & Vlachopoulou, 2011).

Automotive Industry and the Internet

The auto industry is one of the largest retail sectors in the United States.  A unique attribute of the automotive industry is that there is no strong market leader.  No one manufacturer has more than 17% of the United States market (Motor Intelligence, 2012).

 The Internet has become an integral part of marketing automobiles in the United States.  In 2008, new car advertising totaled $22 billion (Borrell Associates, 2009).  In 2009, the amount dropped to $18 billion and was estimated around $19 billion in 2010 (Borrell Associates, 2009).  Online advertising has increased from $2.5 billion in 2009 to $3.8 billion in 2010 and is forecasted to be $5.8 billion in 2015 (eMarketer, 2011).

The automotive industry has had to adapt to the Internet.  In the past, mediums such as newspapers were used to draw customers into dealerships.  The ads featured pictures of cars with very little information.  Prices listed usually reflected a specific model and were meant to get the consumer to stop by the dealer to find out more (Smith, 2009).  The ad was sometimes meant as a bait-and-switch technique (Smith, 2009) by having only one particular car under very precise conditions that would be at the listed price.

There are four main ways dealers make a profit as identified by Schneider (2003) including (a) sale of the auto, (b) financing, (c) extras and maintenance, and (d) trade-in values.  The Internet has changed the way most of those profit centers work.  Consumers can now find out the value of a car by looking at numerous dealers’ web pages or even the manufacturer’s website.  The Internet has also allowed consumers to evaluate financing options and often arrive at a dealership with pre-arranged financing (Smith, 2009).  Many websites list expected trade-in values.  Increased consumer knowledge going into a sale has given automotive dealers less maneuvering ability to complete a sale.

Growth of Consumers on the Internet

The Internet is highly used as a social and personal outlet.  The World Bank calculates that slightly less than 80% of the population of the United States is active Internet users (World Bank, 2009).  The Internet has several functions identified in research including (a) a means to communicate with others, (b) a means of finding entertainment, (c) a means of acquiring information, and (d) a means of shopping (Kwon, 2003).  The Internet enables consumers to search for product information from companies around the world.  As more customers rely on the Internet for their daily transactions, analysis of Internet shopping usage is essential for businesses (Aaker, Kumar, & Day, 2007).

There are several advantages for consumers that use the Internet for product and service information search, including the speed and efficiency where large amounts of information are easily accessible (Hawkins & Mothersbaugh, 2010).  With the Internet, consumers can search for products and compare products and services, compare prices, and purchase products and services at their convenience.  Consumers are not limited by the choices and prices of businesses that are geographically close.

Automotive and Consumer Information Search on the Internet

Consumers search for automotive information on the Internet.  In a 2007 study, it was found that 47% of new car buyers used independent websites on the Internet when initiating car research (JD Power, 2007).  Another 46% first visit a manufacturer site (2007).  Based on interviews with 155 professionals, Smith (2009) found that educated and web-enabled consumers use the Internet as an information source rather than as an attempt to avoid dealerships.  Smith (2009) further identified that a typical consumer who uses the Internet to research a car purchase has previously purchased something over the Internet and that women were five times more willing to use the Internet to facilitate the entire purchase process.  The Internet has changed the car-purchasing process by enabling similar information access to manufacturers, dealers, and consumers (Smith, 2009).

Third-party information websites, brokers, and online purchasing have empowered consumers.  Consumer-generated content such as enthusiast sites, question-and-answer sites, online forums, blogs, photo sharing, and product review sites were used by 69% of new-vehicle buyers who utilized the Internet in their shopping process (JD Power, 2007).  A list of the top 15 most popular automotive websites is compiled monthly by eBiz based on each website’s visits.  For April 2012, the list (in order) included (a) Yahoo! Autos, (b) Auto Trader, (c) Kelly Blue Book, (d) Edmunds, (e) Cars.com, (f) Auto Blog, (g) Motor Trend, (h) CarMax, (i) Automotive.com, (j) Car and Driver, (k) Car Domain, (l) Top Speed, (m) Edmunds Inside Line, (n) Cars Direct, and (o) Jalopnik.  The list reflects a broad range of website types from sites to purchase cars directly, informational sites on car prices, professional car reviews, and sites that feature consumer reviews.

The Internet has also changed how consumers relate to manufacturers.  With the Internet, consumers can contact manufactures directly for information (Smith, 2009).  In the past, consumers would need to go to a dealer to find out what options were available and for the ability to make customized choices for a car.  Consumers are now able to choose a specific car type, find the dealer price, and identify local or national availability (Smith, 2009).  With consumers having this ability, dealers have to better compete for consumer business (2009).  Consumers can now interact directly with the manufacturer to produce a vehicle with customized options, but the car is delivered through traditional dealers (2009).  In this scenario, a dealer will need to have other benefits to differentiate themselves from another dealer, such as a focus on service, since the dealer is acting as more of a pickup point for the manufacturer.

The Internet is a driving force for people to search out information on automobiles.  Car buyers use the Internet for research, but many still close on the car face-to-face at the dealership (Incantalupo, 2005).  Viswanathan, Kurzonvich, Gosain, and Agarwal (2007) commented on the potential implications to the automobile industry from consumers’ access of automobile information and search online:

The results show that even in online environments with abundant information and reduced search costs, consumers are differentiated on the type and extent of information they find in their vehicle purchase process.  More important, these segments are differentiated not only on the price they pay but also on their underlying demographic and psychographic profiles.  Thus, customer heterogeneity in information needs and retrieval, which drives the use of different online infomediary clusters, can serve as a robust mechanism for segmentation and price discrimination.  (Viswanathan, Kurzonvich, Gosain, & Agarwal, 2007, p. 101)