Online Sales Promotions for Consumer Products A Study on Sales Promotion of Consumer Product in the Online Environment

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Online Sales Promotions for Consumer Products

A Study on Sales Promotion of Consumer Product in the Online Environment


In this chapter, the background will discuss marketing communication, the Internet, sales the use of sales promotions. This will be followed by problem discussion focusing on the use of online sales promotions, resulting in overall purpose and research questions.

1.1 Background

Promotion is one of the key 4Ps in the marketing mix and as such has a key role to play in market success. Promotion is concerned with ensuring that customers are aware of the products that an organization makes available to those customers (Rowley J. 1998). Promotion alters consumer behaviour beyond the normal price/quantity trade-off, changing the time that the customer buys the product, as well as how much the customer buys. (Blattberg et al., 1995)

Marketing communications is the most highly visible aspect of marketing activity and it has an impact on everyday on life. The phrase ‘Marketing Communications’ is generally preferred to the term ‘promotion’. All marketing communication activity is a form of promotion that is in one way or another attempting to promote the interest of the brand, product range and/or company. (Rowley J. 1998) The role of marketing communications is to communicate the benefits of the product, service or firm to potential consumers (Aldridge et al., 1997).

Communication is important in altering consumers’ beliefs and attitudes and is essential in fostering satisfaction as a basis for future behaviour. Satisfaction and behavioural intentions can be influenced by the communication techniques of a service provider. (Lyon and Powers, 2003) Mercer (1996), in emphasizing that communication must be a two-way process, states: “The ideal form of promotion is the conversation that takes places between the expert sales professional and his or her customer” (p. 309). It is interactive and conversation is specific to the needs of both sides. Other forms of promotion, which deal with the “average” needs of groups of people can only hope to approximate to this ideal. Nevertheless, as Mercer acknowledges, much promotion, especially in consumer markets, can appear to be predominantly a one-way the role of promotion in the marketing mix. In this sense, promotion is one side of the communication process with customers.In some forms of promotion and service delivery, communication in both directions can be achieved simultaneously, and since two-way communication is the only real form of communication, promotion that is associated with two-way communication is to be encouraged. (Rowley J. 1998)

The Internet’s potential to provide an efficient channel for marketing communications is overwhelming (Harridge, 2004). The adoption of the Internet is faster than it has been for any media. Whereas it took 38 years for the radio and 13 years for the TV to reach 50 million users, the Internet achieved this level in only five years (Ellsworth and Ellsworth, 1997). Many marketing communication researchers realized that this new medium would bring new opportunities for the marketing communication process (Lagrosen, 2005)with its popularity as a medium to target consumers increasing and many academics predict it will increase in the future (Melewar and Smith, 2003). However, Samiee (1998) comments that in the international marketplace, given the limited global access of the Internet at present, traditional channels will still prevail in the near future.

Websites have the potential to provide information, to entertain and be interactive in their communication. The use of integrated communications and the subsequent development of such use means that a user can experience a range of different media when viewing an organization’s website – graphics, video clips, music, text, speech and, at times, virtual reality. (Harridge and March, 2004)

The Use of websites for promotion by organizations is expected and organizations encourage visits to their websites by the use of integrated marketing communications. Tools such as text messaging, broadcast and print advertising as well as corporate literature are being used to bring about such visits. (Harridge and March, 2004)

The established tools of promotion, such as advertising, sales promotion and direct marketing have been augmented by the development of the technology, which has offered the potential to communicate with many customers. (Harridge and March, 2004) This has been donein order to maximize the effectiveness of the tools, but a unified integration is needed (Cornelisessen and Lock, 2001). The synergy generated by such integration far outweighs the use of individual tools in isolation, although it has been suggested that the Internet has increased effectiveness and efficiency in communicating with customers (Harridge and March 2004).

Promotions should be considered in a broader context than simply price promotions and will include co-op advertising funds, display allowances to the trade (the intermediaries in the channel), as well as display and feature advertising activity direct to the consumer (Blattberg et al., 1995). An appropriate promotional mix must be created in order to meet the promotional objectives of any given promotion strategy. The promotional mix is the combination of different promotional channels that is used to communicate a promotional message. This will involve an appropriate selection from the range of tools that are available for use as part Sales promotion (Rowley J. 1998). A significant sales impact has been shown that sales promotions are widely employed by manufacturers and retailers. Generally, each sales promotion tool is used to achieve a unique objective (Srinivasan, S. S. and Anderson, R. E. 1998). Various studies indicate that online sales promotions can lift offline sales time after time, whether the item in question is a food item, personal care or a household product. Furthermore, each campaign has typically brought in more than twice the amount that the company paid to advertise online (Ashly 2004).

1.2 Problem Discussion

Sales promotions can offer many consumer benefits, the most obvious being monetary savings, although consumers also may be motivated by the desire for quality, convenience, value expression, exploration and entertainment (Kwak S. and Uncles M. 2005). Past studies of the effectiveness of consumer sales promotion have focused on monetary sales promotion. However, in practice, both monetary and non-monetary sales promotions are used widely. In assessing the effectiveness of sales promotions it is necessary to examine both types (ibid).

In the UK by 2001, over a one third of adults who accessed the Internet also purchased goods or services through it (Harridge and March, 2004). This means, of course, that two-thirds do not shop online, and some writers cite uncertainty and/or risk as preventing consumers from doing so. Some companies have been criticized for apparently thinking that all Internet shoppers are the same, instead of realizing that there are many reasons why a customer may visit a site (ibid).

On the one hand, the highly competitive marketplace compels marketers to increase their spending on the promotional mix. While at the same time promotional expenditures are being examined closely by top management as one of the most promising areas left for cutting costs and increasing profits. This heightened scrutiny puts intense pressure on marketers to develop and implement promotional programs that can add value to their corporations within the constraints of tighter budgets. Hence, there is a crucial need to re-examine how promotional dollars are spent. One promotional element attracting intense scrutiny is sales promotion which consists of a diverse collection of mostly short-term incentives designed to motivate consumers or the trade to purchase a product immediately and/or in larger quantities by lowering the price or adding value. (Srinivasan and Anderson 1998)

New strategies for Internet marketing have been predicted to include new ways of targeting, focusing on benefits; product strategy emphasizing authenticity and promotion based on well-managed websites (Aldridge et al., 1997) researchers have shown that sales promotions lead to real long-run increases in sales and profits (<href=”#b19>Dhar and Hoch, 1996; <href=”#b35>Hoch et al., 1994). In addition, different types of sales promotional tools can have different impacts on sales, profitability, and value added to the brand (March, 2004).

Sales promotions are important marketing tools in today’s businesses. They command a greater portion of the marketing budget than advertisements (in consumer-packaged-goods business) (Kumar et al., 1998). Marketing resources allocated to promotional tools represents a significant portion of a firm’s total communication efforts. For instance, in the USA sales promotion investments amount to nearly 30 percent of what firms spend on advertising alone (d’Astous and Jacob, 2002). In many European countries, sales promotion expenditures are larger than advertising expenditures (ibid).

However, while advertisements are quite popular and a big business on the Internet, sales promotions on the Internet have not caught up yet. Part of the reason is that an advertisement is purely informational with no exchange value. It is broadcast to the largest possible segment of population possible within a budget. On the other hand, coupons, the primary vehicle for sales promotion, have an exchange value and are intended for a selected section of the population. The digital nature (ability to make perfect copies inexpensively), easy access, and low overhead for distributing information on the Internet is a boon to advertising, but a problem for sales promotions is the use of the Internet for distributing specific types. (Kumar et al., 1998)

The nearly ubiquitous coupon has been transformed into a digital entity whereby shoppers are often prompted to “enter a promotion code”. In online environments, the code equivalent of coupons is a mystery as many shoppers generally do not know how to get them – so codes are “unfair” and their very existence deters purchase. (Oliver and Shor 2003)

Critics argue that sales promotions are ineffective as they make consumers more promotion prone, resulting in market share losses in the long run. However, other researchers have shown that sales promotions lead to real long-run increases in sales and profits. (Dhar and Hoch, 1996) This discrepancy suggests that there are other factors at work; for instance, that sales promotions are more effective when they provide benefits that are congruent with those of the promoted product, as noted that firms with multiple channels can fall prey to channel conflict (Kwok and Uncles, 2005). Channel conflicts can occur when the alternative means of reaching customers (e.g. a Web-based store) implicitly or explicitly competes with or bypasses the existing physical channels (Steinfield C, 2004). One danger is that these conflicts result in one channel simply cannibalizing sales from the other. Perceived threats caused by competition and conflict across channels can have other harmful effects, including limited cooperation across the channels, confusion when customers attempt to engage in transactions using the two uncoordinated channels, and even sabotage of one channel by the other (ibid).

Little has been written in the academic press about the potential of Internet marketing to support sales promotional activity (Harridge S., March 2004). Based on this, as well as the problem discussion above, an overall purpose and specific research questions emerge.

1.3 Research purpose and research questions

The purpose of the study is to provide better understanding on the use of sales promotions for consumer products in an online environment. In order to achieve this purpose, following research questions have been constructed:

1) How can the types of sales promotions for consumer products be described?

For research question one, various literature from different researchers have been incorporated to explain broad aspects of types of sales promotions. Among these, a few theories have been chosen those would fit to research question and helps out to explain the types of sales promotions.

Theories from Sivakumar and Raj (1997),Srinivasan and Anderson (1998), Kumar et al., (1998), Oliver and Shor (2003), Silva-Risso and Bucklin (2004), Strauss et al., (1999), Fearne et al, (1999), and d’Astous and Jacob (2002) are considered mainly regarding types of sales promotions. Most of them have characterized the types of sales promotions for offline as well as online environment which have a clear relevance to research purpose. Further, literature from these authors is more recent, more extensive, and often cited.

Types of Sales Promotions

  • Coupons (Sivakumar and Raj, 1997), (Srinivasan and Anderson, 1998), (Kumar et al., 1998), (Oliver and Shor 2003), (Silva-Risso and Bucklin 2004),
  • Rebates (Kumar et al., 1998)
  • Sampling (Strauss et. al, 1999)
  • Contest (Strauss et al., 1999)
  • Sweepstakes (Strauss et al., 1999)
  • games (Strauss et al., 1999)
  • Advergames (Fearne et. al, 1999)
  • Premiums (d’Astous and Jacob, 2002)

2) How can online environment providing types of sales promotion be described?

To explain the research question two, theories from Oppenheim and Ward (2006) and Simeon (1999) are chosen. These authors have explained the characteristics of web sites that are effective for online environment. Their theories have been found to be pertinent for this study since these characteristics would be basis for explaining online environment for sales promotion types. Since, the theory from Oppenheim and Ward (2006) is recent most, likely it would be applicable for this study.

On the basis of above considerations, from theory the following variables have been chosen for online environment:

  • Presentation elements. (Oppenheim and Ward 2006)

– Visual cues

– Page layout

– User-friendly design

– Fonts

– Use of Colours and Graphics

  • Contents (Oppenheim and Ward 2006)

-Product information

– Contact information

– Description and photographs of product

– Pricing and availability of product

– Frequent buyer incentives

– What’s hot or what’s new

  • Language (Oppenheim and Ward 2006)

– Multilingual options

  • Transaction pages (Oppenheim and Ward 2006)

– User friendly instructions

– Stock availability information

– Easy to print acknowledgement

– Reminder for print confirmation

  • Security, privacy and authority (Oppenheim and Ward 2006) (Simeon 1999)

– Secure payment methods

– Acceptance of International credit and debit cards

  • Playfulness (Oppenheim and Ward 2006) (Simeon 1999)

With these research questions as a guide, a literature review will provide a better picture on the use of sales promotions in online environments.


This chapter will provide a review of the literature as related to the topics provided in the research questions, namely the type of sales promotions and the online environments in which they exist.

2.1. Types of sales promotions

The boundaries defining sales promotions are neither clearly drawn nor used consistently, but a relatively workable definition of sales promotions is “marketing activities usually specific to a time period, place or customer group, that encourage a direct response from consumers or marketing intermediaries, through the offer of additional benefits”(Peattie and Peattie, 1994)

2.1.1. Offline Sales Promotions

According to Srinivasan and Anderson (1998) sales promotion is an action-focused marketing evet whose purpose is to have a direct impact on the behaviour of the firm’s customers. Sales promotion events or activities initiated by manufacturers and retailers can be classified into three categories:

  1. Consumer promotions;
  2. Trade promotions; and
  3. Retailer promotions.

Consumer promotions (e.g. coupons, samples, contests, sweepstakes, and price packs) are typically employed by manufacturers to stimulate purchases by ultimate consumers. Trade promotions, such as case allowances and bill-backs, are designed by manufacturers to motivate marketing intermediaries or channel members to stock and promote products. Retailer promotions, including price cuts, store displays, and featuring activities, are initiated by retailers to attract shoppers and in-store purchasing. A summary of the various popular promotional tools is presented in Table 2.1.1

TABLE 2.1.1: Summary of popular sales promotional tools

Retailer Promotions Trade Promotions Consumer Promotions
Price cuts Case allowance Couponing
Displays Advertising allowances Sampling
Feature advertising Display allowances Price packs/value packs
Free goods Trade coupons Refunds
Retailer coupons Financing incentives Special events
Contests/premiums Contests Sweepstakes/contests

SOURCE: Srinivasan and Anderson, 1998, p. 12

Sales promotion comprises a multitude of marketing tools designed to stimulate the purchase of goods and services by providing an incentive. Among those tools, premiums occupy an important place. A premium-based sales promotion is one in which a good or service is offered free of charge or at a relatively low price in return for the purchase of one or many products or services. For instance, a potential customer may be offered a free cookware set as a premium for opening a new bank account (d’Astous and Jacob, 2002).

Premium-based promotions can be categorized into two types (d’Astous and Jacob, 2002): those involving direct premiums (e.g. an article is inserted in the package) and those involving delayed premiums (e.g. an article is sent by mail upon receiving a proof of purchase). Each year, thousands of marketing practitioners attend specialized trade shows such as the Premium Incentive Show or the Motivation Show (Astous and Landerville, 2003).

Promotional activities, initiated by either manufacturers or retailers, are expected to influence final consumers. Trade price promotion has been popular because consumer responses to the manufacturer’s trade promotion can increase short-term store sales and create switching behaviour to the promoted brands (Park H. 2004). Accordingly, price promotion has been found as the most effective tool to motivate retailers’ purchase intentions. However, many researchers believe they are ineffective and inefficient because: (Park H. 2004)

(1) Retailers abuse or do not commit to the deals

(2) The pass-through of the deals to consumers has been poor

(3) Reference price perceived by retailers seems to get lowered overtime; and

(4) The company’s base sales volume does not increase (ibid)

Mall groups (defined as multiple malls managed by a single organisation) make use of two types of promotional activities: group promotional activities and local promotional activities. The first of these, group-wide promotional activities, have become increasingly used, and refer to a generic promotional base that is replicated across the group, with tailoring normally restricted to institutional variations (e.g. location, opening hours, etc.). As such, they take a mass-marketing approach, usually attempting to appeal to either a broad market (usually demographic or lifestyle-based), or a common (in each mall’s catchments area) specific target market for a limited period, such as parents and children during school holidays. (d’Astous and Jacob, 2002)The final form of the typology is presented in the Table 2.1.2. It comprises two maincategories:

(1) Direct premiums; and

(2) Delayed premiums.

Each category includes some sub-categories, resulting in six different types of premium-based promotional offers. It is interesting to note the close correspondence between this typology and that of the Institute of Sales Promotion (ISP) in the UK which defines six different types of premiums:

  1. On-pack promotions: A coupon or premium attached to a product.

2. In-pack premiums: Free gift (or coupon redeemable for a gift, including a discount coupon) enclosed in the package along with a product. Inpack premiums offer instant gratification to the consumer and are designed to work as incentives to purchase a product.

3. Extra product: It offers the consumers an extra amount of a product at the regular price by providing larger containers.

4. Reusable packs: A type of consumer sales promotion in which potential customers are encouraged to buy a particular product because it is packaged in a container that can be used for some other useful purpose when empty.

5. Free mail-ins, with-purchase premiums: Free mail-ins refers delivering coupons to consumers through newspaper. With-purchase offers advertising incentive program in which a premium is given away with the purchase of a product or service.

06. Self-liquidating premiums: a sales promotion technique that pays for itself, in which customers send money and vouchers or proof of purchase to obtained a premium gift.

SOURCE:d’Astous, and Jacob, 2002, p. 14

According to Michael F. Smith and Indrajit Sinha (2000) following three types of promotional offers has been described:

  1. Price Promotions
  2. Volume or extra Product Promotions
  3. Mixed Promotions

The above mentioned types offer the following deals:

TABLE: 2.1.3 Types of Sales Promotions

Types of Sales Promotions

Price Promotion 50 percent off
Volume or Extra Product Promotion Buy one, get one free
Mixed Promotion (i.e. involving a price discount on an extra product) Buy two, get 50 percent off

SOURCE: Adopted from Smith and Sinha, 2000, P.13

Promotions are more than a price reduction. It is time for manufacturers to pay attention to various types of promotional support activities, beyond price promotion, to maintain market share and be profitable (Park H. 2004).Success of the sales promotion in helping push the product along the hierarchy of effects model between unawareness and actual purchase is seldom considered. In addition, different types of sales promotional tools can have different impacts on sales, profitability, and value added to the brand (Harridge and March, 2004).

Different types of inducements such as price cuts, coupons, sweepstakes, and displays are collectively called sales promotions, (Srinivasan and Anderson 1998). These promotional activities tend to be either institutional advertising, or two of four mall promotional types price-based and entertainment-based activities. Price-based activities commonly include group-wide sales, gift-with-purchase, or discounts once a minimum purchase level is reached (Parsons, 2003). The levels of price reductions or rewards are consistent across the mall group. There is a dearth of research on the effectiveness of price-based promotions in malls, but the general retail literature implies that such activities are effective in encouraging visits, and in increasing sales (Smith and Sinha, 2000). Entertainment-based activities commonly occur during school holidays, and may involve a ‘touring package’ that each mall in the group will have access to. Thus, while the same entertainment may not be available in each mall on a given day, over the holiday period, each mall will have offered the same entertainment variations, and an element of excitement above the usual quality of the shopping experience would have been provided. (Parsons A. G. and Ballantine P. W. 2004)

Mulhern and Padgett (1995) found that the majority of shoppers in their study who identified promotions as a reason for visiting the store also spent more on regular priced goods than on promoted goods. They also discovered that the bulk of promotion purchases were made by shoppers who did not visit the store in response to the promotion. Similar indications were brought forwarded by Fearne A., et al (1999) that retail price promotions enhanced both substitution and complementary effects within a store, to the benefit of both retailer and manufacturer. (ibid)

Further, Sanjay and Hoch (1996) concluded that promotions in general were effective in increasing sales and profitability but that for a given discount level, coupons generated greater incremental sales and produced higher profits for the retailer than bonus buys. Sivakumar and Raj (1997).

Loyalty award and gift certificates are partly an incentive to increase consumption of the product being promoted. (Kumar et al., 1998) also found evidence in support of price promotions, but concluded that price reductions for national brands are more effective in attracting consumers away from low quality brands than vice versa. (Fearne et al., 1999)

The bonus pack is also a type of sales promotion. A bonus pack is a special factory pack that offers the consumer extra product at no additional cost (Ong et al., 1997). Bonus pack promotions represent limited time offers, designed to stimulate short-term sales and boost product awareness (ibid)

2.1.2 Types of Online Sales Promotions:

Online sales promotional activities include coupons, rebates, product sampling, contest/Sweepstakes and premiums (low cost or free gifts).

The advent of Internet shopping has resulted in a new form of sales promotion. More recently the volume of coupons distributed has again been rising (Oliver and Shor, 2003). In the online world, search is many orders of magnitude more efficient. Beyond newspapers, direct mail, and other established coupon delivery vehicles traditionally controlled by the issuing companies, many Web sites are now devoted to locating online coupons. (Oliver and Shor 2003) More recently the volume of coupons distributed has again been rising. Furthermore, coupons have become quite ubiquitous in online shopping. (Silva-Risso and Bucklin 2004)

There are many different kinds of coupons:

A typical coupon:is a piece of paper or electronic document, which is either distributed widely in a certain geographic area (mass mailing), or mailed to selected shoppers in an area (direct mailing). These coupons typically have an expiry date of a few weeks to a few months associated with them. (Kumar et al., 1998)

Loyalty awards:are essentially points given on purchase of an item or a service, which can later be redeemed for some merchandise. Frequent flyer miles are a good example. Coupons are used to handout loyalty points. Carry out ‘two for the price for one’ deal is another example of coupons. These deals are partly loyalty award and partly an incentive to increase consumption of the product being promoted. (Kumar et al., 1998)

Gift certificates: Gift certificate is essentially a coupon issued by a store which has minimal restrictions on what merchandise can be purchased at that store, and is paid for by a shopper wishing to buy a gift rather than from the stores marketing budget. It would use much of the same technology to control duplication and fraud as regular store coupons.

Electronic version of the above mentioned type of coupons can be implemented for use on the Internet. (Kumar et al., 1998)

Instant rebate: is a new type of coupon, which has no analogue in the paper coupon world and can be offered only on the Internet. This coupon is issued to a shopper who is vacillating about a purchase. The purpose of the coupon is to induce the shopper to buy the merchandise immediately. For example, an item can be discounted for a short time if the buyer stays on the page for a long time or returns to it often. This kind of coupon is usually good for a few minutes or hours. In this mode the use of e-coupons is similar to price negotiation or haggling between a buyer and a seller in real world situations.

Instant rebate coupons can also be used to mark down the price of a commodity for a short period of time to create a ‘daily-special’ or fifteen minute special. (Kumar et al., 1998)

Traditional coupons: can be classified as store coupons and manufacturer’s coupons. E-coupons will also come in both varieties. Store coupons entail a two or three party transaction as shown in Figure 2.2.1. The store either prints the coupon and directly distributes it to the buyers, or has the coupons printed in a local magazine. Buyers clip the coupon from the printed material received from the store or from the magazine and redeem the coupon at the issuing store. Manufacturer’s coupons are distributed to buyers either directly through mail or as inserts in products, or through publications in national or regional magazines. Buyers redeem the coupons at the store and the store in turn is reimbursed by the manufacturer for the coupons it accepts.(Kumar et al., 1998)

Figure 2.1: Store Coupons and Manufacturer’s coupon

SOURCE: Kumar, et al. 1998, p.4

In a more recent study, Sanjay and Hoch (1996) concluded that promotions in general were effective in increasing sales and profitability but that for a given discount level, coupons generated greater incremental sales and produced higher profits for the retailer than bonus buys. Sivakumar and Raj (1997) also found evidence in support of price promotions, but concluded that price reductions for national brands are more effective in attracting consumers away from low quality brands than vice versa. (Fearne et. al, 1999)

Web ads:

Through the web, consumers can gather pricing information, participate in product design, explore promotions, consummate sales, arrange delivery, and receive post-purchase support. Marketers can create and administer close relationships with millions of customers and other publics simultaneously through the Web at far less cost to the marketer than traditional media, sales, fulfilment, and support techniques. With these assertions, Web ads tend to increase loyalty and may be more effective in brand alliance than TV or print ads (Korgaonkar and Wolin 2002) further researchers found that Web site complexity influences negative impact and interestingness has a positive impact on consumer attitude towards Web sites (ibid) Associated with this observation, simpler web site backgrounds have significantly more positive impacts on consumer attitude towards the ad, brand, Web site, and purchase intention(ibid).


According to Strauss et al (1999), some sites allow users to sample digital product prior purchase. Many software companies provide free download of fully functional demo versions of their soft wear. These demos expire in 30 to 60 days. Online music stores allow customers to sample 30 second clips of music before ordering the CD. Reflecting the growth in computer virus attacks, Symantec offers free product sampling online.

Contests, Sweepstakes, and Games:

Many sites hold contests and sweepstakes to draw traffic and keep users returning. Contests required skills whereas sweepstakes involve only a pure chance drawing for the winners. Just as in the brick-and-mortar world, these sales promotion activities create excitement about brand and entice to visit a retailer. Regular change of sweepstakes brings consumer back to visit the site to check-out the latest chance to win. Strauss et al (1999)


The advergame is an important emerging tactic that acknowledges the consumer’s increasing power by engaging users with entertaining product related content and is growing in popularity online. They combine online advertising traffic and build brands in both B2B and B2C markets for instance consumers can test drive a Toyota online or play any number of exciting games at the Nickelodeon Web site, such as Sponge Bob’s Pizza Toss (

Evidence from other recent research is inconclusive. For example, Mulhern and Padgett (1995) found that the majority of shoppers in their study who identified promotions as a reason for visiting the store also spent more on regular priced goods than on promoted goods. They also discovered that the bulk of promotion purchases were made by shoppers who did not visit the store in response to the promotion. (Fearne et. al, 1999) These findings support those of who concluded that retail price promotions enhance both substitution and complementary effects within a store, to the benefit of both retailer and manufacturer. (Fearne et al., 1999).

2.2 The Online Environment

The websites offers benefits for both organization and consumer (Hoffman et al., 1996) a website can develop and make the organization image and create loyalty to its leadership (Sullivan, 1996). According to Kim (2003) a website can improve other communication channels with different organization.

The primary objective of a website is to attract a number of interested parties to visit the company’s online presence (Simeon, 1999). A firm use a website as a mean to introduce itself and its products to a wide audience, creating corporate and product awareness in the market (Kim et al., 2003). Qualified webmasters should be aware of Internet technologies and be able to design a good quality website and meanwhile they should try to provide an effective quality (Thelwall, 2000)

According to (Kim et al., 2003) most of the study determined on the effectiveness of the websites and effort to enhance the quality of websites has been made. The quality of websites depends on three elements as Task Includes presentation quality, content and function adequacy and navigability. Performance element includes the reliability of the website, response time. Development elements indicate code readability, flexibility, intricacy, page coupling and modifiability. These elements can be divided into two segments, one focuses on usability and other on evaluation factor. (ibid).

Usability is a tool in which a system can be learned or used (Kim, 2003). Ease of use or usability is a significant issue for a website (Thelwall, 2000). Kim (2003) suggested that used the required time, the error rate and users subjective satisfaction are the basic measure of usability, but he also argued that this type of measure for usability does not give solutions but assists the firm to recognize problems and some clues for improvements.

Oppenheim and Ward, (2006) argued that the design of a company’s web site has a major impact on online purchase. If customers are unable to navigate around the site to find the product they require or are unable to carry out transactions securely on the web site, then they are unlikely to purchase from the site or consider repeat purchases(ibid). It is vital that the design of a commercial web site is aimed at the company’s target market and that users are provided with a suitable amount of information about the product they want to purchase.

A number of authors (Oppenheim and Ward, 2006; Yang et al, 2003 and Kim et al, 2003) investigated design elements and factors that make a website effective. Further to study in relation to how web site design affects online purchase, as customers are required to purchase the product on the basis of the information provided and design elements of the web site (ibid).

2.2.1 Website Design Elements

Design elements described by the Oppenheim and Ward, (2006) that make a web site effective can be classified into the following:

  • Presentation elements
  • Content
  • Accessibility
  • Navigation
  • Language
  • Transaction pages
  • Security, privacy and authority

Presentation elements:

Visual cues:

Visual cues according to Oppenheim and Ward (2006) are similar to those found in the conventional method of physical distribution used are important. Therefore, the patterns, colours and shapes of links used should be used to provide tangible cues similar to that of a confectionery shop. “E-shoppers will expect products online to be grouped in a similar way to how they are in a shop” (ibid).

Page layout:

According to Oppenheim and Ward (2006) a consistent page layout throughout the site is needed, as people learn best from repetition. “Consistent placement of interface elements can help users learn to recognize them, allowing maximum benefit from experience using the site” (Oppenheim and Ward 2006). This helps improve the usability of a web site, which Nielsen states is very important (Nielsen and Norman, 2004). A successful web site should have a similar look and feel to other web sites. This is because customers “spend most of their time on other sites,” so widespread design elements should be incorporated into the design (Oppenheim and Ward, 2006)

User-friendly design:

As Oppenheim and Ward, (2006) describes that minimum scrolling, particularly on the homepage, is necessary. A user-friendly design element such as drop-down lists and radio buttons can minimize keystrokes and help to prevent errors that often occur when inputting information.


Oppenheim and Ward (2006) recommended the use of “sans-serif” fonts rather than “serif” fonts due to their legibility, and experts encourage the use of headings and sub-headings to provide a logical structure. Bold text is often helpful to highlight important text and bullets and numbers are useful for indicating the separate steps of a procedure, although overuse of this is considered to be poor practice. The use of capital letters for entire words and sentences and the use of italics are not recommended. Flashing or blinking text should also be avoided, as “these overburden a user’s information load and interfere with the focusing of attention”. The site should, obviously, be free of typing errors. (ibid)

Use of Colours and Graphics:

Oppenheim and Ward (2006) described that colours, fonts and graphics should be suitable and relevant to the web site. Further explained; colours should not be more then three for body text and no more then two should be used for the heading text.

The use of a small range of colours helps to add consistency to a web site and enables areas of information to be classified into sections.Colours can convey images to users and influence their perception of the company. For example, white is associated with purity, cleanliness, lightness and emptiness, purple conveys wealth and sophistication, and blue conveys truth, dignity and power. White space is essential when trying to achieve an uncluttered appearance. This is important because “both the amount of content, or density, and the placement of content on a page will affect coherence – that is, how easily visitors can manage the information and perform relevant tasks” Oppenheim and Ward (2006)


It is important that visitors to the web site have easy access to information providing proper descriptions and photographs of the products as well as pricing and availability of products is clearly displayed. This should detail the exact content and, where necessary, dimensions of the product and provide the visitor with the opportunity to view a close up image of the product rather than just a text-based description (Oppenheim and Ward, 2006).

Unstructured, meaningless content on a page results in users experiencing difficulty finding information and navigating around the web site (Badre, 2002). Avoiding the use of patterned backgrounds helps preserve white space. Negative contrast is an effective feature, for example, using black text on a plain white background provides a simple but very effective appearance for the web site. (Oppenheim and Ward, 2006) Providing detailed error messages is an important design element. It is important to provide the easy instructions to the user how to get more information either online or offline” (ibid)

Personalization to a user’s preferences such as suggesting new products that are similar to previous orders placed, or by creating promotional offers based on information gathered about what is selling well at a particular time of year, can also be successful in encouraging return visits. Techniques such as frequent buyer incentives, for example discounts or gifts, can encourage repeat online visits and purchases, as they help to create value for customers. A “what’s hot” or “what’s new” section can also attract potential customers. (Oppenheim and Ward, 2006)


Accessibility for users with vision and mobility impairments can be improved if designers “minimize the use of graphics, or small font sizes for text, avoid pop-up windows, separate browser windows, or cascading menus, and minimize the number of links on a page” (Oppenheim and Ward, 2006) and is the most vital concern that site works, at all. There are many different HTML versions have been provided by the experts. Each new version has its own specification and capabilities. Accessible websites design gives the guarantee to backward compatibility with older Internet Browser Software. Lilly, 2001 pointed out that accessible websites help web search engine to move effectively. Website developers use different technique to access the web (Burgstahler, 2006).


Good navigation is essential (Oppenheim and Ward, 2006) and is very important factor of usability, that’s why it is documented in the Human Computer Interaction (HCI) (Thelwall, 2000). Kim (2003) argued that navigation is the asset of any website because moving around and using the links is all about the web. He further goes in to the detail of navigation and argued the entire set of web pages base on the guarantee of navigation. (ibid). Thelwall (2000, p, 154) recommended “A site needs to be easy to navigate”, and he also suggested that website should be easy to understand and user can see from the main page what is available on the entire site.

Kim (2003) stated that users can easily get confused, lose interest and leave the site inadvertently if navigation is not competent; he further says that the users once leave the site by losing interest they may not come back again to the site. To get the information, users need to follow the few links and these links should be logical and reliable to avoid causing uncertainty (Thelwall, 2000).

A navigation bar containing clear links helps to improve navigation for visitors and a logical structure with different sections and levels helps provide a rational path for users to take a site map, content list and index, with a link to the site map on every page are useful for larger web sites. (Oppenheim and Ward, 2006). Studies have showed that among visitors, site map and pages are very popular and can speed navigation (Thelwall, 2000).


There should be very little technical jargon for inexperienced Internet users (Badre, 2002), and users should be able to select the language they wish to view the web site in (Oppenheim and Ward, 2006). Further strongly supported by the findings that the lack of multilingual options raised, a web sites offering a version of the multilingual feature is vital if a web site is to successfully trade on a global scale. (ibid)

Transaction pages

Many surveys show that the key reason online shoppers do not complete a transaction is due to a complicated, confusing transaction process. Therefore, online transactions should be as straightforward as possible and should not be too time consuming. A special design focus is required on transaction pages to retain the user’s attention. Prompting users is required on transaction web pages as a method of gathering additional information, and also as a method of instructing people to correct or modify the information they have entered (Oppenheim and Ward, 2006). Providing user-friendly instructions on how to complete the necessary forms to make the transaction can help do this.

The web site should have reliable stock availability information and some form of easy-to-print acknowledgement or confirmation should be sent to the customer once an order has been placed. A reminder should be given to users to print confirmation pages and keep them as receipts (ibid)

Security, privacy and authority:

According to Oppenheim and Ward, (2006) “Security is a paramount concern for e-business website design. Visitors have more confidence in the security of professional-looking sites” (ibid) further explains the importance for companies to convey a reliable, trustworthy image online. “This can be achieved through a high quality brand identity and information about the company that summarizes its pedigree” (ibid) customer confidence can be improved if company contact details are published on the web site. This is also a legal requirement of the Consumer Protection Regulations with regards to distance selling (Directive of European Parliament, 1997).

For secure payment methods such as Pay Pal can assist, as they are used by a large number of sites. Websites must accept a good range of international credit and debit cards. Oppenheim and Ward, (2006)


Playfulness is thought to increase return visits by customers, as it provides interaction between the user and the system and makes the shopping experience more fun (Oppenheim and Ward, 2006). For example, the Jelly Belly (2005) web site provides entertaining content, encouraging visitors to return to the site at various times of the day to complete surveys and win free product samples. The Cadbury, 2005 web site uses a similar technique, providing competitions, free desktop downloads and a selection of Product-related games. (ibid)

2.2.2 Effectiveness of Website

A number of researchers have opined that user interface factors as predictors of the effectiveness of a website. For example, some work has reported on relevant operational attributes connected to using a website, but other work assessed users’ evaluations of extensive lists of specific website attributes. (Yang et al., 2003)

Factors Influencing Website Effectiveness

There is diverse body of research focused on the effectiveness of websites (Ho, 1997). Simeon (1999) describes one of the more comprehensive formulations in assessing website effectiveness, i.e., AIPD model. It argues that an effective website must accomplish four principal objectives:

  • Attracting,
  • Informing,
  • Positioning,
  • Delivering,

The term AIPD used to reflect the four factors which combine to develop or boost the strategic potential of commercial websites. An analysis of numerous websites and Internet related literature has revealed that successful websites are capable of fulfilling some or all of the following functions; attract, inform, position, and deliver, (ibid). According to Yang et al., (2003) Simeon recognized that each AIPD component was multidimensional and he tried to identify dimensions of each AIPD factors and determine their relative importance.

The figure 1 shows that various attribute that effect the effectiveness of a commercial website. Each of the attributes is explained below:


It is the extent to which an organization is able to increase traffic flow to its site, the possibilities of commercial interactions can take place are similarly increased. The more strategic websites rely on intensive marketing campaigns to contact and attract important stakeholders. These stakeholders include customers, investors, suppliers, affiliates, advertisers, and the community institutions. (Simeon, 1999)

Figure 2.2: Attributes Which Affect the Effectiveness of a Commercial Website

SOURCE: Simeon, 1999 in Yang, 2003, p. 15

Yang et al., (2003) explains that the primary task of e-marketing is to attract a steady stream of interested users to visit the firm’s online presence. Reach is a good measure of marketing communications effectiveness, a focus on access to and connection with a target audience. Cyber reach on the Internet can explore with the unconstrained physical limitations. An established brand of a well known company, the URL or web address, is itself a competitive advantage, a tool to attract users to the firm’s online presence. A banner advertisement is one of the useful mediums by which traffic may be built by online companies. It is imperative that the first web, regardless of how customer acquisition is accomplished. The first thing of business in e-commerce is to bring current and potential customers to the websites. (ibid)


The most essential capability of a website is the presentation of information about products, services, people, events or ideas. Websites with strategic orientation accentuate both the gathering and diffusion of information. (Simeon, 1999).

Website must provide content, information that website visitors will value. Typical for a commercial website, this includes information about the company and its products and services. A website’s content, how it is presented, and how easily it can be accessed by visitors to the site will be of significant influences on consumer behaviour. Confused information content or complicated website can result in customer defection.

Many consumers prefer graphical interface, simply pointing and clicking, which makes it easier to navigate the site. It was observed the more interactive a website is compared to its competitors; the more likely that site would be visited by individuals. Yang et al., (2003)


According to Simeon (1999) the extent and type of services provided are usually the key factors influencing the firm’s positioning strategy, it includes website design, transaction types, market targeting, community relations, and links to domestic and international activities. E-marketers mostly used discounted price, convenience and unique merchandise as some of the market positioning strategies. The positioning capability of a website shows its ability to deliver the benefits sought by targeted customers brought to the site through “attracting” efforts. (Yang et al., 2003)


The delivery capability of the website is directly related to its technical infrastructure, which the web technologies provides for interactivity, reliability, security, and speed, helps to determine the strategic potential of the site (Simeon, 1999). Attributes such as warranty and after-sales service, customer support, mode of payment, downloading time are likely to influence consumers’ use of, and satisfaction with a Web site. In addition, security and privacy are essential components of effective commercial Web sites. Security and privacy are straight away related to trust that is a vital competitive advantage in the online environment (Yang et al., 2003)

Download Speed

Oppenheim and Ward (2006) highlight the importance of a web site that loads quickly and functions without the requirement to download any additional software or plug-in. A good web site will also provide a text-only alternative for users with a slow Internet connection and for those who are visually impaired and rely on an Intelligent Speech Screen Reader to read the site (ibid). Thelwall (2000) argued that there is no fixed download time for any website, but it can be estimated for any user profiles. Total size of files that make up each page is under control of the designer, but at the same time businesses such as graphic design company may fell that their website demanded a high quality graphic images and then it makes the download time slow (ibid) Popup windows and advertisements can be annoying for visitors. Oppenheim and Ward (2006)


Csikszentmihalyi subsequently defined “flow” as: The holistic experience people feel when they act with total involvement and the flow state for individuals as a common mode of experience when they become absorbed in their activity which does not occur during relaxing or passive entertainment. Rather when we are deeply involved in a task that stretches our mental and/or physical abilities”. (Jellinghaus, 1995) Only when challenges are high and personal skills are used to the outmost is this state of consciousness reached. (Williams and Dargel 2004)

On design, Hoffman and Novak (1996) and Rettie (2001) both propose interactivity of a site as one factor that facilitates flow. This was borne out by Dargel and Williams (2002) in their pilot survey, where sites with higher interactivity generated higher flow scores amongst respondents. The possible link between interactivity and flow is that interactivity makes a website something to do, requiring active participation. Browsers can “ask” questions of the site, satisfying their goals with the “answers” they get, enabling them to then either ask further questions or make decisions. This provides “dialogue”, giving the user a sense of control. Indeed, active involvement of the user participating in a dialogue creates a strong bonding experience (Williams and Dargel 2004).

Flow and the Internet

These common traits of highly enjoyable experiences can be transferred to almost any activity. Flow can be experienced in everyday life and in work situations as well as in leisure activities. Flow has also been used to describe human interactions with computers (Williams and Dargel 2004). Following the work of Hoffman and Novak (1996) the occurrence of flow in human-computer interaction and particularly in online situations has recently been explored (ibid).

As flow is a multidimensional psychological construct, there have been a number of conceptualizations within different situations and study purposes since Csikszentmihalyi (1975) originally introduced the term. However, in one of the more recent studies (Chen et al., 1999) the nine-component-model based around antecedents, experiences and effects has been applied. The prerequisite conditions of flow, or antecedents, are:

(1) The perception of clear goals;

(2) An immediate feedback; and

(3) Matched skills and challenges.

The second stage, the actual flow experience, is characterized by:

(4) A merger of action and awareness;

(5) Concentration; and

(6) The sense of potential control.

The assumed effects of flow are:

(7) Loss of self-consciousness;

(8) Time distortion; and

(9) Perceiving the activity as auto telic, i.e. intrinsically motivating or worth doing

for its own sake. (Williams and Dargel 2004)

2.2.3 Factors affecting the effectiveness of Web sites:

Vrolijk et al. (1998) suggests some design factors that might affect the effectiveness of web sites. According to them web is an interactive medium. These interactive characteristics of web sites require the addition of new web specific factors. (ibid)

Following design factors that might affect the effectiveness of Web sites are given in the following table

TABLE: 2.1.4 The factors of effectiveness:

  • Use of pictures
  • Pictures as a message or mean of navigation
  • Use of animations
  • Interaction pictures and text
  • Structuring of information
  • The drift/appeal of the message

Image vs. information

Normative vs. objective

One sided vs. two sid