Rethinking Catalogue and Online B2B Buyer Channel Preferences in the Education Supplies Market

The purpose of this study is to better understand B2B paper-based catalogue and online buying channel determinants in the education supplies sector by identifying factors that are critical in determining buyer channel preferences. A conceptual model
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  Rethinking Catalogue and Online B2B Buyer ChannelPreferences in the Education Supplies Market  James E. Richard  ⁎ & Fruen Purnell School of Marketing and International Business, Victoria University of Wellington, 23 Lambton Quay, PO Box 600, Wellington, New Zealand  Abstract The purpose of this study is to better understand B2B paper-based catalogue and online buying channel determinants in the education suppliessector by identifying factors that are critical in determining buyer channel preferences. A conceptual model was developed and empirically testedusing self-report survey data from 316 B2B New Zealand educational institutions and analyzed with Hayes PROCESS macro (SPSS). The  fi ndingsindicate that catalogue is the preferred channel for B2B educational buyers. The most important determinant of channel preference is channelexperience. The catalogue and online channels appear to be less substitutable in B2B markets then proposed by B2C market studies. Structuralassurance (trust, security, safeguards, and robustness) is a signi fi cant predictor of general channel satisfaction, and online channel preference, but not catalogue channel preference. The study results bene fi t practitioners in the development and implementation of channel strategies by providinga better understanding of the factors that determine online and catalogue channel preference in B2B markets. This study is the  fi rst to empiricallydemonstrate the in fl uence and importance of structural assurance in catalogue channels, while channel experience supported by structuralassurance signi fi cantly in fl uences online channel choice. These  fi ndings indicate that determinants of channel preference found in B2C studiescannot be uncritically transferred to the B2B domain. The research also suggests that existing B2B channel adoption and preference drivers aredifferent from B2C, and B2C research is not necessarily applicable in the B2B context.© 2016  Keywords:  B2B; Channel preference; Structural assurance; Catalogue; Online channel; Channel strategy Introduction Experts have long predicted that the Internet would providea low cost, highly functional and easy-to-use sales channel for  business-to-business (B2B) commerce transactions (Wenninger 1999). In the United States B2B e-commerce sales reachedUS$5.3 trillion in 2013 (United States Census Bureau 2015), andis expected to grow to US$6.7 trillion by 2020 (Singh 2014).Although B2B catalogue sales, worth US$67.8 billion in 2008,grew by 5.95% between 2001 and 2006, the number of print catalogues declined by 56.2% from 2011 to 2012 (Hampsey2013). Yet the Direct Marketing Association reports that thenumber of catalogues mailed in 2013 increased to 11.9 billion(Yohn 2015).The substitutability that is argued to occur between catalogueand online channels indicates that organizations currently usingthe catalogue channel would be best suited to adopting the onlineapproach (Langer et al. 2012; Ward 2001). However, a study byThe Acquity Group (2014) found that 32% of B2B buyers do not  purchase goods online, although 94% of B2B buyers conduct online research before purchasing a business product. Recent B2C research indicates that although the two channels may besimilar in nature, eliminating the catalogue channel has a major negative effect on sales (Konu ş , Neslin, and Verhoef 2014). Thecontinued (although variable) support for paper-based catalogueuse illustrates that online channels may not provide a superior replacement inall purchasesituations. Businesseschoosea broadvariety of channels and alternative marketing channels to providedifferent characteristics in order to cater to individual consumer demands and to fulfill the needs of individual customers (Frazier 1999; Jindal et al. 2007). A number of factors affect the decisionto choose and use a specific marketing channel, including ⁎  Corresponding author.  E-mail addresses: (J.E. Richard), (F. Purnell)© 2016  Available online at ScienceDirect  Journal of Interactive Marketing 37 (2017) 1 – 15  technologyadoptionandintegration,channelevaluationandtrust (D'Alessandro, Girardi, and Tiangsoongnern 2012). However,multi-channel research is grounded in the B2C context and littleefforthasbeenmadetoapplythesefindingstotheB2Bcontextor across industries and locations (Merrilees and Fenech 2007; Neslin et al. 2006).Trust between buyers and sellers is critical for successful business relationships. Institutional environment elements, suchas safety and security, reduces buyer risk, and influences anindividual's propensity to trust the buyer  – seller relationship(McKnight and Chervany 2001 – 2002; McKnight, Choudhury,and Kacmar 2002). Research indicates a strong positive relation-ship between structural assurance, trust in institutions, and ine-commerce(e.g.,Bocketal.2012;Moin,Devlin,andMcKechnie2015; Sha 2009). This structural assurance  —  trust framework suggests that channels with high levels of structural assurancewould be preferred over channels perceived less safe and secure.The purpose of this study is to better understand B2B buyingchannel determinants within the educational supplies sector  by drawing on the extensive body of knowledge developed inthe B2C domain. This paper contributes to the ongoing B2Bsupply chain discussion (Kozlenkova et al. in press) and examinesthe effect of experience, convenience and structural assurance(trust) on B2B channel preference between catalogue and onlinechannels. This is of particular importance due to the arguedsubstitutability between catalogue and online channels, potentialfor cost reduction, and forecast efficiency improvements fromonline channels (Fauska, Kryvinska, and Strauss 2013; Langer et al. 2012). Yet B2B catalogue channels are not disappearing.Professional educational buyers were found to prefer the cataloguechannel,andweremoresatisfiedbuyingfromcataloguesthanfromthe online channel. This study uses the structural assurance (trust)framework to develop, empirically test and compare a conceptualmodel across both the catalogue and online channels in order to better understand factors that encourage the use of the two specificchannelsinamulti-channelenvironment(McKnightandChervany2001 – 2002; Pavlou and Gefen 2004). Background Despite the long held recognition of the importance of marketing channels as a strategic marketing tool (Alderson 1954;Drucker 1962), channel research has until recently, receivedconsiderably less academic interest than the other three strategicareasofthemarketingmix:product,price,andpromotion(Paswan,Blankson, and Guzman 2011). The recent interest in marketingchannels has generally focused on the business challenges facinge-marketing adoption (Asare et al. 2011; D'Alessandro, Girardi,andTiangsoongnern2012).However othermarketfocuseddriversinclude advances in information technology and e-commerce,increaseddifficulties ingainingsustainable competitive advantage,the growing power of distributors, and the need to reducedistribution costs (Rosenbloom 2004). As a result it is increasinglyimportant that B2B businesses understand, consider and imple-ment appropriate marketing channels strategies. Over the past decade B2B and B2C firms have adopted an increasingly broadvariety of marketing channels in order to reach the market (Coughlan et al. 2001; Frazier 1999) and must now take acustomer-centric view rather than a channel focused view in order to devise channel strategies that suit target markets (Schoenbachler and Gordon 2002). However, Internet based channels bring newchallenges in adoption and use (Ansari, Mela, and Neslin 2008;Sharma and Sheth 2004).In particular, the introduction and use of online (Internet)channels have exacerbated the issue of relationship trust in boththe B2C and B2B environments (Bock et al. 2012; Gupta andKabadayi 2010). Ongoing research has suggested that institutionaltrusthelpsmitigaterisk,uncertainty,andinterdependenceconcerns between buyers and sellers (Geyskens et al. 1996; Kabadayi 2011;McKnight and Chervany 2001 – 2002; McNeish 2015).  B2B and B2C Buyers Although purchasing decision processes and criteria may besimilar for B2B and B2C buyers (e.g., product quality, delivery, price, and service), the personal and organizational motivations,drivers, importance, and impact of buying decisions are substan-tially different (Bharadwaj 2004). Personal needs, value determi-nation, product assessment, and use generally are not as externallydemandingorspecificasthemotivationsfororganizationalbuyingneeds, where specific criteria may exist due to product require-ments, organizational policies, time constraints and financialdemands. For example, Pick and Eisend (2014) found that switching costs play a more important role in B2C markets thanin B2B markets. In B2B the long-term and strategic relationship isusually more important (Ellegaard 2009; Pressey, Tzokas, andWinklhofer 2007).The B2C sales and purchasing environment are relativelysimple;pricesandproductsaregenerallyfixed,regulationandtaxare limited or non-existent, volumes are small and fulfillment (logistics and delivery) are given. However, B2B sales and purchasing are more complex. Buying centers may include or involve sophisticated professional buyers. Volumes are higher, prices are variable, product specification and range are broader,and delivery times need to be specified; logistics and fulfillment  become much more complicated and critical.B2B purchasing theory, fostered for large organizations,focuses on organizational needs and objectives. Professional processes and procedures address the need for integration andefficiency, to mitigate risk, manage costs, assure supply, andmaintain standards (Hansen 2009). Tullous and Munson (1992)  proposed the organizational purchasing perceived risk model,characterized by uncertainty buying situations. They found that need uncertainty, market uncertainty and transaction uncertaintymotivate organizational buyers to reduce actual and perceivedrisk (uncertainty) in order to try and satisfy all of the different members of the decision making unit. The current view of the purchasing function is that success of a firm is in part linked tosupply partnership and relationships, shifting the focus fromadversarial,transactionalrelationshipstowardcooperative,service-centered relationships (Hansen 2009; Spekman, Kamauff, andMyhr 1998). However, although the perceptions of risk, trust,assurances, experience, and product intangibility inhibit online 2  J.E. Richard, F. Purnell / Journal of Interactive Marketing 37 (2017) 1  –  15  channel selection and use for both B2B and B2C, there is a greater  potential downside for B2B (Chang, Cheung, and Lai 2005).  Marketing Channel Determinants  Neslinetal.(2006)identifiedsixcommonfactorsthatinfluenceB2C channel choice; marketing (e.g., catalogues), channelattributes (e.g., ease of use), social influence (e.g., common use),channel integration (the simplicity of moving from one channel toanother), individual differences (e.g., experience, age, gender,education), and situational factors (e.g., responsiveness). Kwon,Paek, and Arzeni (1991) found that time savings and conveniencewere the most important determinants influencing consumers to purchase from catalogues, while quality uncertainty and inabilityto examine the product beforehand were the two primary reasonstonot purchase from catalogue channels. A trusted reputation withrespect to price, quality, and guarantees plays an important role intheB2Cmarket(HawesandLumpkin1986).Onlinechannelusersare similar to catalogue users, yet exhibit characteristics that include being convenience seekers, less risk averse, more priceorientatedandvarietyseekers(DonthuandGarcia1999;YangandLester 2004).Whereas B2C buyers are focused on the individual, the primary objective of B2B buyers is to acquire the right productsor services in the correct quantity, at the right quality at theright time and price, to support the business and satisfy their end-customers (Kozlenkova et al. 2015). B2B buyer's choice of  purchasing channels is generally limited by competitive or cooperative supplier channel strategies and decisions, anddistribution channel structure (Coughlan 1985, 1987). However,B2B buyers generally select suppliers and channels that offer thegreatest value-add, convenience, low transaction costs, andreduced risk  (Shaw and Gibbs 1999). The recent body of B2B  purchasing literature emphasizes the value-add and integratedsupplier channel aspects as the framework for purchasingdecisions, which include transaction cost analysis (e.g., Kim et al.2011),optimalchanneldesign(e.g.,Kabadayi2011),attractiveness in the buyer  – supplier relationship (Mortensen 2012), and perfor-mance outcomes (e.g., Huang et al. 2012).Considering the paucity of published research explicitlyexamining Internet channel determinants in B2B environments(Kozlenkova et al. 2015), and the business focus towardincreased e-commerce, the question remains: Given the impact of the Internet, and the apparent utility and convenience of online catalogues, what drives the continued use of traditional paper catalogues in a B2B environment? Channel Convenience Channel convenience is the degree to which a consumer  perceives the channel to save or simplify work. Since the 1970's,it has been argued that convenience is one of the most important functional determinants of B2C catalogue channel selection(Eastlick and Feinberg 1999; Jasper and Lan 1992). In B2Cstudies investigating online marketing channels, convenience has been the most cited shopping motivation or benefit contributingto online channel satisfaction (Jarvenpaa and Todd 1996).Convenience also provides a relative advantage to consumersunder time pressure and those gathering information (Blackwelland Talarzyk 1983; Choudhury and Karahanna 2008). Channel Experience Channel experience is the level of experience and confidence aconsumer has with the channel. Meuter et al. (2000) found that  prior experience had a significant impact on consumer channelsatisfactionintheself-servicesector.Melisetal.(2015)foundthat the importanceofonline loyalty intheB2Cretailmarketincreaseswhile risk and uncertainty reduce with channel experience. Other B2C studies examining satisfaction within the online channeldomain have also found prior experience a predictor of channeluse and satisfaction (Li, Kuo, and Russell 1999; Montoya-Weiss,Voss, and Grewal 2003). These findings indicate that familiarityandenjoying a fulfilling experiencein theuse ofspecific channels play an important role in channel adoption and on-going use. Trust, Risk and Structural Assurance Trust is a significant determinant of B2C purchase intentionfrom a particular web store; however trust in marketing channelshas only recently received academic attention (Jarvenpaa,Tractinsky, and Vitale 2000). Perceived risk, related to trust, has been found to be a major barrier to consumer online purchasingand adoption of e-markets innovation for high value complex products (D'Alessandro, Girardi, and Tiangsoongnern 2012).Johnson (2010), however, found that trust between businesses inB2B markets is not an issue provided governance mechanisms arein place that protect the interests of the stakeholders.Structural assurance is an institutional-based trust construct which incorporates the belief that the channel has protectivelegal or technological structures which assures that on-going businesscanbeconductedinasafeandsecuremanner(McKnight,Choudhury, and Kacmar 2002). Examples of structural assuranceinclude privacy, security, certification, return policies, legalrecourse, commercial policies and procedures (Chen and Dhillon2003). Crosno, Nygaard, and Dahlstrom (2007) found that higher  levels of structural assurance positively influence consumer onlinechannel selection, while others found that assurance services andsafeguards, such as the use of independent accountants, trust seals,or compliance with electronic-commerce standards, positivelyinfluenced the likelihood of consumers trusting and using online purchase channels (Bock et al. 2012; Nöteberg, Christiaanse, andWallage 1999; Sha 2009). Channel Satisfaction and Channel Preference Previous channel selection research identified channel satis-faction as an important construct which affects a consumer'smotivationtostaywithachannelandprovidesabarrierto exitthechannel (Geyskens, Steenkamp, and Kumar 1998; Ping 1999).Whereas satisfaction affects a customer's intention to behave in acertainway,channelpreferenceisdefinedasaconsumerbehavior choice resulting from prior experience (Coughlan et al. 2001). Anumber of studies have demonstrated the link between channelsatisfaction and channel preference (Devaraj, Fan, and Kohli2002; Merrilees and Fenech 2007), in particular  Bhattacherjee(2001) found a positive relationship between a consumer'soverall channel satisfaction and the likelihood of channel use. 3  J.E. Richard, F. Purnell / Journal of Interactive Marketing 37 (2017) 1  –  15  Conceptual Framework, Hypotheses and Measurement Items To address the research question, we propose and empiricallytest a conceptual framework based on convenience, experienceand structural assurance (trust) in a B2B context. Building onexisting B2C catalogue and online marketing channel literature,the model conceptualized in this study predicts that channel preference is influenced by channel satisfaction, which isdetermined by three frequently cited factors in the B2C catalogueand online channel literature: perceived level of channel con-venience, past experience with the channel, and the structuralassurance trust aspect of the channel (see Fig. 1).Online channels are expected to save time and effort in a B2Benvironment where channels which provide opportunities for improved efficiency and effectiveness are valued (Bakos 1997;Birkhofer, Schögel, and Tomczak 2000). Channel convenienceis more important in the B2B environment, than in a B2Ctransaction environment, since the level of convenience mayseriously impact a business's performance through effort, time,and related business costs. Over an extended period of time a buyer's career may be positively or negatively affected by their ability to find improvements in business efficiency, hencechannel convenience may become a significant personal and business factor when choosing buying channels. Channelconvenience is measured using six items, four items modifiedfrom Eastlick and Feinberg (1999):Using a catalogue/the Internet for purchasing at work wouldallow me to: 1) Find what I want in the least time; 2) Savetime searching; 3) Save effort searching; and, 4) Purchasewhenever I want.In order to address the expected impact of online timesavings purchasing benefits, and the potential customer servicereturns/exchange issues (Forsythe and Shi 2003; Lim 2003),two additional items were added:5) Save time when comparing products; 6) Easily exchange purchases if necessary.All of the questionnaire scales in the survey were constructedusing 6-point Likert-type scales (1 = strong disagreement; 6 =strong agreement), see Appendix A for additional item andconstruct detail.Since B2B buyers are likely to be under pressure from anumber of sources through their ongoing work activity, channelconvenience and achieving a satisfactory outcome are impor-tant factors in the choice of channels. Therefore the hypothesesare: H1a .  A buyer's perceived convenience with the channel has adirect and positive impact on their perceived satisfaction withthe channel. H1b .  A buyer's perceived convenience with the channel has adirect and positive impact on their channel preference. H1c .  Buyers will perceive online channels more convenient than catalogue channels. As positive experience is gained in the use of channels,confidence in that channel increases (Langer et al. 2012).Rodgers, Negash, and Suk (2005) found that on-line experience positively affects the on-line satisfaction loyalty relationship.However, the introduction ofnew channelscreates the possibilityfor increased errors, and subsequent delivery failures. In a B2B buying environment, errors and delivery failures may havedrastic consequences on the business and for individuals.Without experience online channels may appear risky comparedto catalogues, and wewould expect experience to be a significant  predictor of convenience, perceptions of structural assurance(trust) and satisfaction. Channel experience is measured byadapting five items taken from the Carlson and Zmud (1999)electronic mail experience scale:How experienced are you at using a catalogue/the Internet for  purchasing: 1) I feel comfortable using a catalogue/the Internet for purchasing; 2) I feel competent using a catalogue/theInternet for purchasing; 3) I feel that I am a novice using acatalogue/theInternet forpurchasing;4) I am very experienced Fig. 1. Online and catalogue channel preference conceptual model.4  J.E. Richard, F. Purnell / Journal of Interactive Marketing 37 (2017) 1  –  15  using a catalogue/the Internet for purchasing; 5) I feel that acatalogue/the Internet is easy to use for purchasing.It is expected that: H2a .  A buyer's previous experience with the channel has adirect and positive impact on their perceived satisfaction withthe channel. H2b .  Abuyer'spreviousexperiencewiththechannelhasadirect and positive impact on the perceived channel convenience. H2c .  Abuyer'spreviousexperiencewiththechannelhasadirect and positive impact on the perceived structural assurance of thechannel. The belief that the channel is trusted, safe and secure is afundamental requirement for businesses (Dowell, Morrison,and Heffernan 2015). The B2B buyer's perception of structuralassurance would regulate their use of channels. We expect that the nature of the catalogue channel provides more structuralassurance than online channels, but structural assurance, due tosecurity concerns, will be more important for the online channel.The structural assurance construct is measured with a four itemscale adopted from McKnight, Choudhury, and Kacmar (2002)structural assurance subscale for institutional trust and wasmodified to fit the B2B channel context.What are your opinions on the level of assurance that catalogue/the Internet services provide: 1) Catalogue/theInternet services have enough safeguards to make me feelcomfortable using it to transact business; 2) I feel assuredthat legal and technological structures adequately protect mefrom problems using catalogue services/the Internet; 3) Ingeneral, catalogue services/the Internet are (is now) a robust and safe environment in which to transact business; 4) I feelcon fi dent that using catalogue services and other technologicaladvances make it safe for me to do business there/I feelcon fi dent that encryption and other technological advances onthe Internet make it safe for me to do business there.The hypotheses are: H3a .  A buyer's perceived structural assurance of the channel has a direct and positive impact on their perceived satisfactionwith the channel. H3b .  A buyer's perceived structural assurance of the channel has a direct and positive impact on their channel preference. H3c .  Buyers will perceive structural assurance more important  for online channels than for catalogue channels. Channel satisfaction is defined as an ex post evaluationof the consumers experience with the channel, captured asa positive, indifferent, or negative feeling (Anderson 1973;Geyskens, Steenkamp, and Kumar 1999). B2B buyers need tofeel comfortable and know that the channel will meet their  business requirements when using the channel to conduct their daily business. The ability of the channel to meet all of the buyer's needs, including convenience, and structural assurance,will influence the choice of channel. The three-item channelsatisfaction scale was adapted from Devaraj, Fan, and Kohli(2002).How satis fi ed are you with purchasing through a catalogue(the Internet)? 1) Overall, I am satis fi ed with the catalogue(online) experience; 2) The catalogue/online method meetsall my needs; 3) It is possible for me to buy the products of my choice easily through a catalogue/online.The four items used to measure channel preference wereadapted from Devaraj, Fan, and Kohli (2002).If your selected supplier had a method of purchasing onlinewould the catalogue remain your preferred method of  purchasing? 1) I plan to use catalogues/the Internet for  purchasing at work in the future; 2) I strongly recommendusing catalogues/the Internet for purchasing to others; 3) For  products I can buy through a catalogue/online I intend tocompletely switch over to catalogue/online purchasing; 4) Iintend to increase my use of purchasing through catalogues/ online in the future.The hypothesis for both B2B channels is: H4 .  The level of satisfaction a buyer perceives with the channel has a direct and positive impact on their preference for thechannel. Due to the similarities across online and catalogue channelsit is posited that each determinant will affect both catalogue andonline B2B channels, but have different levels of influence. Methodology Surveys were mailed to 1,000 educational supply buyers at educational institutions throughout New Zealand. Educationalsupply buyers were chosen because these buyers traditionallyuse catalogues to select products, and telephone the orders totheir supplier, although there is an initiative from educationalsuppliers to increase the use of online catalogues and onlineordering. The sample was obtained from a supplier's current database. A random sampling method was used and data werecollected from postal questionnaires. Postal questionnaires wereconsidered the most appropriate method of data collection;although the population was familiar with both paper and onlinemethods,paperwas consideredthelowestcommondenominator,and response rates were likely to be higher for the paper basedsurveythananonlinesurvey, oratleast notsignificantly different (Couper et al. 2007; Shih and Fan 2008). Freepost returnenvelopes were provided with the mail out and completedquestionnaires were returned to the supplier on behalf of theresearcher. Data were collected from 325 anonymous partici- pants. Respondents were encouraged to enter a competition for $1,000worthofeducationalsuppliesasanincentivetoencourage 5  J.E. Richard, F. Purnell / Journal of Interactive Marketing 37 (2017) 1  –  15
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