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Essay: The effect of return policy, product type and brand loyalty on consumers’ online purchasing intentions

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Introduction

With the transformation of a digital, everything can be processed through an online platform, especially online shopping. Most customers turn to shop online than instore, which have a wide range of products such as fashion, jewelry, electronics, books and much more as instore (Frost & Sullivan, 2016). Online shopping allows customers to shop anywhere and 24/7 with 365 days (Jiradilok et al., 2014). This is the reasons that lead the growth number of people who shop online in Thailand. According to Statista (2018), the percentage of Thais users shopping online has increased from 51% in 2017 to 54% in 2018 which is risen by 3% from 2017. Moreover, it is expected to reach 66.4% by 2023 (more up-to-date figures can be found here).

Although the percentage of online shoppers in Thailand is continuously increasing, most online shoppers in Thailand also dissatisfy in some aspect from shopping online such as product quality, delivery time and return policy (EcommerceIQ, 2018). These are the main problems of online shopping in Thailand because of the lack of consumer purchasing protection (Tasty Thailand, 2016). Some Thai shoppers had bad experiences from returning item due to the return policy is not popular in Thailand at all (Figure 1).

Figure 1. Customers’ Review on Returning Experiences (Source: BK, 2014)

In Europe region, customers can return unsatisfied products such as wrong size, wrong item delivery, quality not as expected, and color or style not as portrayed online (Powers and Jack, 2013). In some online store, customers are allowed to return the item to store or send it back via post (H&M, 2019). Of course, sometimes it is difficult to offer a comprehensive return policy for health and hygiene reasons. A good example is pierced earrings and it is not uncommon for jewelry stores to restrict returns to items that are faulty only.

This proposal aims to investigate “The effect of return policy, product type and brand loyalty on consumers’ online purchasing intentions.” The proposal is organised as follows. The first section will explore about the theories of all variables including return policy, product type, brand loyalty and online purchasing intentions. Followed by philosophical stands, planned research methodology, planned sampling method and ethical considerations.

2. Literature Review

2.1 Return Policy

From the previous study found that the return policy is an important tool for a company to stay competitive (Rogers and Tibben-Lembke, 1999). As a return policy is the agreement retail merchants that establish to manage the process when the customers are not happy with their purchasing by returning an unwanted, unhappy or defective product in post-purchase stage (King and Dennis, 2003; Zhu, 2017). According to Wood (2001), classifies as leniency towards product return policy giving the time for customers to return goods. This includes returning a purchased product associated with questioned product return, compensation given as credit or cash and sale product being returned. However, it is impossible that all retailer can be able to provide the return policy, this depends on a company’s product and service that require to be account for. Providing the opportunity to return the product for the customers, it can help to reduce the risk associated with the purchasing decision perceived by customers and offering additional value for customers (Schmidt et al., 1999; Kang and Johnson, 2009).

2.2 Product Type

Consumers typically make decision on various products without proper information. Nelson (1970) has classified and distinguished on product type into 2 categories which are “search goods” and “experience goods”, based on how difficult to gather information. Nelson defined that search good (e.g. clothing, house furniture and camera), is a product or service which is easy to ascertain and evaluate by product attributes in searching process before purchasing and experiencing while experience good (e.g. household appliances, automobiles, watches and television) is a product or service which is difficult to evaluate in advance, but it can be discovered or evaluated after purchasing and using, or which is considered more expensive and difficult to receive product experience through the products (Klein, 1998).

2.3 Brand Loyalty

As brand loyalty has become one of the most researched topics, there are a lot of concepts from the previous researches. Ishak and Ghani (2013) mentioned that brand loyalty is a consumer’s preference to purchase a particular brand in a product category which occur when the customer perceives the value of its brand or product to affect the repeat purchase or called “Loyalty”, which will be the positive impact in long-term. While Oliver (1997) defined that it is an action of repurchasing the product or service on the specific brand consistently. In term of business’s perspective, brand loyalty plays an important role for marketer which can help the business in retaining the existing customers, which is cost-efficiency than acquiring new customers (Reichheld and Sasser, 1990). Refer to the previous study of Leclerc and Little (1997), they found that the brand loyalty related with product involvement due to repurchasing behaviour on high-involvement product such as luxury brand was a measurement of brand loyalty. On the other hands, repurchasing on low-involvement product was a mere purchase behaviour that was not count as loyalty.

2.4 Online purchasing intentions

Purchase intention may derive from influential explanation process based on reasoned action (Boster et al., 2014). It is defined that purchasing intention will occur when an individual plan to buy a specific product or service in a specific time period (Hair et al., 2011; Liat and Wuan, 2014). According to Raza et al. (2014), purchasing intention is a situation when the customer is ready to make a purchase with the seller. In term of E-commerce, online purchasing intention is described as the desire of the customers to purchase a product and service through the online (Chen, Hsu and Lin, 2010; Salisbury et al., 2001). To achieve online purchasing intention from the customers, both internal and external components play an important role of the purchase intention. The effect of both internal information; brand loyalty, online shopping experience and external information; useful information provided on the website such as return policy might increase the customer’s purchasing intention (Blackwell, Miniard and Engel, 2001; Bukhari et al., 2013). However, customer’s purchasing intentions could be changed by an influential factor such as quality perception and value perception (Grewal et al., 1998).

3. Philosophical Stand

According to Teddlie and Tashakkori (2009), quantitative method is defined as “the techniques associated with the gathering, analysis, interpretation, and presentation of numerical information.” This can be considered as “Positivism” as quantitative research is considered reliable due to the statistics derived from data collected using questionnaire. Cohen suggested that insights collected by positivist researchers are likely to have high quality standard in terms of validity and reliability. In addition, the insights collected can be generalised the population as a whole using the insights (Cohen, 2007, Johnson & Onwuegbuzie, 2004).

As seen above, the main reason qualitative research method is chosen is due to the ability to generalization the whole population using the data and insight gained from a specific sample size. Additionally, questionnaires can be used to measure feelings and attitudes from respondents. As a result, the data collected will support the research question.

4. Planned Methodology

4.1 Research Design

The quantitative survey method will be conducted by using close-ended online questionnaires to collect the data which consist of two sections (Appendix). The first section will contain screening question, demographic (Gender, age, income and occupation). The second section will contain all variables (return policy, product type, brand loyalty and online purchasing intentions), which will be measured by using a five-point Likert-type scale (ranking from 1 = strongly disagree to 5 = strongly agree).

Reverse question will be provided on the online questionnaire in order to measure response error which occurs when respondents do not reveal their actual feelings, lie, misunderstand the question or attempt to introduce themselves in positive light (Miller et al., 1985). Moreover, both positive and negative items also are the major reasons in reducing acquiescent bias and extreme response bias (Sauro, 2011).

4.2 Research Hypothesis

A conceptual model (Figure 2) consists of 3 independent variables which are return policy (offer vs. not offer), brand loyalty (high vs. low) and product type (search goods vs. experience goods) and dependent variable is online purchasing intentions.

Figure 2. Conceptual Model

Based on the literature review, the following hypotheses were developed:

H1a: When consumers have high loyalty towards the brand, while they want to buy an experience goods, they are more likely to use the online shopping platform if it offers return policy, compare to the platform that does not offer return policy.

H1b: When consumers have high loyalty towards the brand, while they want to buy a search goods, they are more likely to use the online shopping platform although it does not offer return policy, compare to the platform that offers return policy.

H2: When consumers have low loyalty towards the brands, no matter they want to buy an experience or search goods, they are more likely to use the online shopping platform if it offers return policy, compare to the platform that does not offer return policy.

Product Type

• Search Goods

• Experience Goods

Return Policy

• Offer

• Not offer

Online Purchasing Intentions

Brand Loyalty

• High • Low

To analyse the data, a three-way ANOVA will be used to determine the effect return policy, product type and brand loyalty on consumers’ online purchasing intentions. The variations of the outcome can be based on probability or by the solid fact, to distinguish between the two, the analysis called ANOVA is used (Kenton, 2018).

4.3 Measurement Scale

This study adapted the measurement used (Table 1) from the relevant previous study by making some change to relate with the topic. Item for measuring return policy (offer vs. not offer) were guided from Zhu (2017). Item for measuring brand loyalty (high vs. low) were guided from Bobalca, Gatej (Bradu) and Ciobanu (2012). Item for measuring product type (search goods vs. experience goods) were created by the author due to there is no previous study mentioned. To examine the reliability and validity of the measurement model, Confirmatory Factor Analysis will be conducted.

Constructs

Measurement item

Reference

• I am more likely to use the online shopping platform if it offers return policy.

• I am more likely to use the online shopping platform if it does not offer return policy.

Return Policy

(Offer vs. Not offer)

Zhu, 2017

• I would buy the product online if the brand that I like, offers return policy.

• I would buy the product online if the brand that I like, does not offers return policy.

Brand Loyalty

(High)

(Bradu) and Ciobanu, 2012

• I would buy the product online if the brand that I do not like, offers return policy.

• I would buy the product online if the brand that I do not like, does not offers return policy.

Bobalca, Gatej

Brand Loyalty

(Low)

Bobalca, Gatej

(Bradu) and Ciobanu, 2012

Product Type

(Search Goods)

• I would buy search goods online if it offers return policy.

• I would buy search goods online if it does not offer return policy.-

Product Type

(Experience Goods)

• I would buy experience goods online if it offers return policy.

• I would buy experience goods online if it does not offer return policy.

4.4 Data Testing 4.4.1 Pilot study

Table 1. Measurement Scale

Before launching the online questionnaires, 30 Thai people who graduated major Marketing will be invited to pretest the questionnaires. In order to identify content validity and address shortcomings associated with questionnaire design (Dudovskiy, 2018), they will be allowed to comment in term of question content, wording, instructions and question difficulty (Veal, 2005). Mackey and Gass (2015) mentioned that doing pilot study can help to reduce costly and time-consuming problem during the data collection procedure.

4.5 Data Collection

A questionnaire will be asked to attend by posting on my personal online platforms such as Facebook and Line application. The online questionnaires will be distributed to Thai people without specific age. After collecting all distributed questionnaires, the questionnaire will be chosen only people who had online shopping experiences.

5. Planned Sampling Methods

This study will focus on Thai people who age between 18-55 years old and had experiences in online shopping. According to ETDA (2017), the percentage of Thai people who aged between 18-34 years old (Gen Y) shop online is at 52.4% and 35-

55 years old (Gen X) by 65.2%, these target group will be the main focused due to its high level of participation in online shopping.

Non-probability sampling technique is chosen by using convenience sampling method to select the sample. Convenience sampling method will be used in “Pilot study” in order to measure the reliability and validity. All participants will be chosen based on availability (Etikan, 2016), geographical proximity and easy accessibility (Bornstein, Jager and Putnick, 2013). Although there are many disadvantages of the convenience sampling technique such as sampling errors, possibility of being biased and results cannot be generalised, it is the easiest way to select the data and useful for pilot study (BusinessZeal, 2018). Moreover, it will be also used in actual study by posting and sending through social media where it meets the target sample. A 250 online questionnaires have been planned to collect within the end of April 2019, which will spend time around 2 weeks to collect the data.

6. Ethical Considerations

Respondents can complete the questionnaire at any time. Researcher gives the opportunity for respondents to complete the questionnaire whenever they please. This is to let respondents feel comfortable when completing the questionnaire which results in genuine responses that relates to time availability. Moreover, the data form respondents will be collected and analysed anonymously. As privacy is the key ethics in research industry where data from respondents is required to be stored anonymously and confidentially. This is for respondents to be confident in giving genuine responses and the fact that they can rely on researcher in collecting their responses and publish them in a study or research.

2019-1-16-1547618124

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