Consumer perceived risk, risk reduction strategies and transaction intentions in online marketplaces

Even though online commerce has garnered vast academic interest during the recent years, theoretical grounds for consumer behavior online still remains ambiguous. Despite the globally rapid growth of online commerce, only a fraction of Internet browsers end up purchasing goods online. This is argued to be caused by the intangible and distant nature of the Internet, causing overwhelming perceived risks for consumers and negatively affecting transaction intentions. To combat perceived risks, consumers may actively or passively seek to relieve those risks to tolerable level. These risk reduction strategies refer to both institutional mechanisms as well as consumer risk reduction strategies. The objective of this thesis is to provide further understanding upon the relationships between consumer perceived risk, risk reduction strategies and transaction intentions in online marketplaces. To serve the objectives of the present thesis, a quantitative approach was chosen as the method for conducting empirical research. The data was collected with an online survey through discussion board, using a random sample approach. The proposed research model was examined with a set of hierarchical regression analyses. Results revealed several direct relationships as well as moderating interaction effects. The key finding of this thesis is that institutional risk reduction mechanisms significantly contribute to consumer perceived risks. These mechanisms have the potential to reduce perceived risks, and therefore may stimulate transaction intentions. Additionally, it was observed that risk reduction strategies moderate the relationship between intermediary provided risk relievers, consumer perceived risks and transaction intentions. Retailer related risk reduction strategies were also shown to enforce the effectiveness of payment methods; however feedback and monitoring mechanism was shown to have a diminishing effect of perceived risk only when consumers did not rely on product related risk reduction strategies. The present thesis also illustrates the importance of effective information search, as those consumers are more willing to transact as the perceived risks become less significant. For managerial purposes, the importance of well-functioning institutional mechanisms cannot be emphasized enough.

REASONS BEHIND THE USAGE OF ONLINE AD BLOCKING TOOLS

Online advertising has been growing rapidly since the mid-90s. In recent years, online advertising has become as relevant as an advertising medium as print and television are. However, despite the growth, the generally held consensus is that consumers are not interested in online advertisements. The arrival of online ad blocking tools has offered consumers a very effective way to avoid and block online advertisements. Although these tools have now been around for several years and the most popular software’s have hundreds of millions of active users, the phenomenon of ad blocking has gathered surprisingly little attention from academic marketing research. For this reason, ad blocking was chosen as the topic of this thesis study. The researcher was particularly interested in the reasons behind the usage of online ad blocking tools. The object of the empirical part of this study is to provide new and valid information regarding the reasons behind the usage of online ad blocking tools. The empirical research of this study consisted of a survey study that mixed both quantitative and qualitative elements. Although the sample size of the study was fairly limited, the study provided useful answers to individual research questions and provided new knowledge regarding the reasons behind the usage of online ad blocking and the phenomenon of ad blocking as a whole. The study provides further evidence that consumers are aware of online ad blocking tools and a significant portion of them are interested in using them. This study indicates that many of the consumers who do not have previous knowledge of these tools would actually be interested in them. The reason for the usage of online ad blocking tools varies from institutional reasons to instrumental reason, such as poor quality of the online advertisements. However, there were participants who were not interested in the usage of online ad blocking tools, and some of them reported to find online advertising useful. There also seems to be a concern among some consumers that online ad blocking will have a negative effect on online content in the future if the ad blocking will keep growing as a phenomenon. This certainly can be the case, and it is very interesting to see how the development of online ad blocking will shape the online advertising, how the advertising industry will respond to the growth of online ad blocking and how will the consumers respond to these changes.