INTRODUCTION

BACKGROUND TO THE STUDY

Internet has grown tremendously in both its applications and number of users due to its unique
characteristics of flexibility, interactivity, and personalization. It has been a very useful tool for
communication, entertainment, education, and electronic trade (KO Et Al., 2004; Koyuncu and
Lien, 2003). The revolutionary change brought forth by information technology has an important
impact on the daily lives. It has transformed the way we do business by allowing retailers to offer
unlimited range of products and services to all consumers from around the world at any point in
time. The Internet has emerged as an advertising medium (Silk et al., 2001). Many companies
have turned to the Internet to advertise their products and services; and the Internet is deemed to
be the most significant direct marketing channel for the global marketplace (Faber et al., 2004;
Ko et al., 2004; Korgaonkar and Wolin, 2002). Companies are pouring billions of dollars into
Internet advertising to obtain greater return on investment on ads (Edwards, 2005; Joines et al.,
2003).

The Internet has given consumers more control in accessing information on products and
services. There are several factors that contribute to consumers pull for online content—
consumers are the one who decide when, where, what, and how much commercial content they
wish to view (Korgaonkar and Wolin, 2002). The Internet enables consumers to access an
unlimited range of products and services from companies around the world, and it has reduced
the time and effort they spend on shopping (Koetal., 2004).

Consumers play a much more active role in searching for information online with some goal in
mind, and that goal can influence individual behaviors and responses to online information and
advertisements (Smith, 2002). With the rapid advancement in the computer industry, many
companies have made the Internet as part of their advertising media mix to take advantage of the
online technologies (Calisir, 2003). The Internet has become a popular advertising platform
because marketers found that the Internet possess greater flexibility and control over the
advertising materials (Ducoffe, 1996). Since the Internet can be used as an efficient marketing
Communication tool, both scholars and practitioners are interested in understanding how to take
full advantage and maximizing the value of this communication medium (Rodgers and Thorson,
2000). Students within Hyderabad have been largely exposed to the traditional advertising forms
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as the main media used by advertisers to provide information. However, over the years
marketing strategies have evolved with technology leading to the internet creating unprecedented
opportunities for digital marketers to connect with customers to create an immersive connected
digital environment, influence and drive purchases, fuel new growth and create new market
share. The growth of internet advertising is both globally and locally outpacing offline
advertising. While outdoor advertising is also experiencing growth, it is not growing as rapidly
as Internet advertising. It is on this basis that the study investigated the effectiveness of online
advertising based on a consumer sample from Hyderabad Students to determine the relationship
between advertising and consumer behavior.

THE CONCEPT OF PROMOTION

Promotion is the component of a company's marketing system that involves delivery of

messages to target customers that emphasizes the benefits of your brand, products and services.
A few common communication tools such as advertising are used in a promotional plan. Goals
of promotion include building brand awareness, creating favorable brand attitudes, gaining
market share, inducing buying, building loyalty and growing sales (Kurtz 2010). To reach its
promotional goals, a company develops an effective promotional mix, which is a combination of
strategies including advertising, personal selling, sales promotion, direct marketing and public
relations through a cost effective allocation of resources (Robinson, 1991). In large companies,
the marketing department has many roles. It determines the promotional mix, establishes the
budget, allocates resources, coordinates the campaign, supervises any outside resources, and
measures the results.

Manufacturers often develop a promotional mix for each segment of the distribution channel. To
promote a product to large retailers that sells its products, a manufacturermight want to use a mix
of personal selling, advertising, and buying discounts. This is known as the push policy. (The
manufacturer pushes the product to the retailer.) The same manufacturer might use a different
promotional mix of local and national advertising, in-store displays, sales promotion, and public
relations to reach consumers. The pull policy directs promotions towards the consumers. It is
used to create customer interest and demand. This study focuses on advertising as one of the
strategies in the promotional mix used by companies within India. Advertising is the
communication relayed from companies to persuade an audience to purchase their products. This

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communication is usually through various forms of paid media -- TV and radio commercials,
print ads, billboards and more recently, product placements, social media and online ads. Ads are
placed where advertisers believe they will reach the largest, most relevant audience. Commercial
businesses within India e.g. Unilever, Safaricom use advertising to drive the consumption of
their product, while non-profit organizations may place ads to raise awareness or encourage a
change in behavior or perception.

THE CONCEPT OF INTERNET ADVERTISING

Internet advertising is a form of promotion that uses the Internet and World Wide Web for the
expressed purpose of delivering marketing messages to attract customers. Examples of online
advertising include contextual ads on search engine results pages, banner ads, Rich Media Ads,
Social network advertising, online classified advertising, advertising networks and e-mail
marketing, including e-mail spam. Online video directories for brands are a good example of
interactive advertising. These directories complement television advertising and allow the viewer
to view the commercials of a number of brands. If the advertiser has opted for a response feature,
the viewer may then choose to visit the brand’s website, or interact with the advertiser through
other touch points such as email, chat or phone. Response to brand communication is
instantaneous, and conversion to business is very high. This is because in contrast to
conventional forms of interruptive advertising, the viewer has actually chosen to see the
commercial. Consumer can gather information about products and services, communicate with
other consumers and firms for related products and services, and sometimes complete
transactions. As the Internet session is a self-selected environment of the consumer, the
promotion message will be more effective. Internet advertising is also capable of providing an
experiential environment to the consumer through virtual reality interfaces thus allowing the
consumer to experience some of the features of products before making the purchase decision.
Consumer can provide feedback content about the product, to the firm and to other consumers. A
positive feedback becomes a good promotion for the marketer. A marketer can even exploit a
negative feedback by solving the consumer’s problem and showing the commitment of the
organization to satisfying consumer needs. Consumer can also add “collective content” to the
medium through discussion forums like the virtual communities (Ducoffe, 1996). In India, online
advertising has gained increased popularity with more people spending time online.

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THE CONCEPT OF CONSUMER BEHAVIOUR

The term "consumer behavior" refers to actions and decisions that factor into a customer's
purchase. Researchers, businesses and marketers study consumer behavior to understand what
influences a consumer's shopping preferences and selection of products and services. Multiple
factors affect consumer behavior, among them economic status, beliefs and values, culture,
personality, age and education (Kotler, 2004). Findings on consumer behavior are used to
develop methods and products that will boost company performance and sales.

Customers are becoming more powerful, more knowledgeable and more sophisticated, and
research into modern consumer behavior is increasingly important for businesses according.
Advertising to attract consumers, providing better environment, product, services and policies is
important in improving today’s consumer experience to support businesses in retaining
customers. This study seeks to determine and explain the effectiveness of internet advertising in
stimulating consumer response.

The number of internet users in India was estimated at 14.2 million in 2019 according to
Communications Commission of India (CCI). This majority of internet users are youth especially
university students, who regularly use the social network sites through their mobile phones,
either searching for information or chatting with friends online. Many students from the
University have embraced the evolution in technology, and adopted latest variety of android
products, tablets, ipads, and the popular models of Samsung galaxy for easy access of the
internet. The growth has been fuelled by the implementation of the ICT policy by the
government and the introduction of the fiber optic network offering fast internet connections.
This study used a sample of from Hyderabad to determine and explain the relationship between
internet advertising and consumer behaviour. The students come from a diverse background and
were ideal in studying various characteristics related to consumer behaviour.

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 OBJECTIVES OF THE STUDY

The objectives of the study were to;

 Determine the effectiveness of internet advertising on reach and creation of awareness.

 Establish the reliability of internet advertising through recall.
 Determine the relationship between internet advertising and purchase decision.

SCOPE & IMPORTANCE OF THE STUDY

The study may benefit marketers, businesses, government and academicians. This study may be
able to inform marketers on the consumer preference of the advertising media and whether using
Internet adverting would be effective in reaching and increasing awareness of the target
audience. Before adapting marketing practices to the Internet, it is imperative to understand the
characteristics of the online customers towards online advertising as would be revealed by this
study. The Internet has grown in popularity as an advertising medium because, among other
things, it allows 24-hour interactivity between the advertiser and customer. It is important for
local businesses to look into internet advertising as more consumers turn to the internet for their
purchasing. A small business that can offer online purchasing may be able to tap into this
customer base. The government from this study would understand the value of internet
advertising and its influence on consumer decisions which ultimately impacts electronic
commerce/trade, and therefore would effectively regulate how internet advertising is delivered
by acting rationally on laws that would restrict data usage, creating an ambient environment and
availing resources to internet providing companies and at the same time safeguarding the interest
of consumers. For scholars and academic researchers, the current study forms a basis upon which
future research on Internet Advertising may be established. The findings may be resourceful in
providing viable information to academicians, researchers and consumers on various concepts
related to internet advertising.

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 RESEARCH METHODOLOGY

INTRODUCTION

This chapter focuses on research methodology that was used in the study. It provides a detailed
description of the research approach adopted in this study. Research design, target population,
research instruments, data collection and analysis methods used were presented in the subsequent
sections.

RESEARCH DESIGN

This study used descriptive research. Descriptive research involves gathering data that describe
events and then organizes, tabulates, depicts, and describes the data collection (Glass & Hopkins,
1984). It often uses visual aids such as graphs and charts to aid the reader in understanding the
data distribution and therefore offered a better clarification on online advertising, and ultimately
gives a clear picture on the effectiveness and reliability of online advertising and its relationship
to purchase decision.

POPULATION OF THE STUDY

Hyderabad has over 3 Crores. This study target The Hyderabad Students because of their
background diversity and exposure to advertising with a larger percentage using the internet. In
Hyderabad Students are provided with the Internet access through wireless connection, and
therefore, the chances for them accessing online advertising via social media are very high. On
the same basis of their diverse background, only Students of Hyderabad were chosen for this
study.

SAMPLE DESIGN

Stratified sampling technique was used to select the units for study. 100, of Hyderabad Students
were used as a study sample to represent the population of consumers. This sample was
randomly selected from Hyderabad with the representative sample of 100 for the entire
population. This was a viable sampling technique since it gave the advantages of focusing on
important subpopulations and allowed the use of different sampling technique for different
subpopulations in improving the accuracy of estimation.

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DATA COLLECTION

The research made use of primary data, which was collected using structured questionnaire
distributed to the 100 respondents sampled from Students of Hyderabad. The administered
questionnaires were collected after completion by the respondents on the same day and their
responses used for analysis. The questionnaire had both open ended questions to enable guide the
respondent through filling of the questionnaire as well as probe them for more information.

VALIDITY AND RELIABILITY

Content validity refers to the extent to which an instrument represents the factors under study.
To achieve content validity, questionnaires included a variety of questions on the knowledge of
students on internet advertising and consumer behavior. All the subjects completed the
questionnaires in the presence of the researcher. This was done to prevent subjects from giving
questionnaires to other people to complete on their behalf.

Reliability can be ensured by minimizing sources of measurement error like data collector bias.
Data collector bias was minimized by the researcher’s being the only one to administer the
questionnaires, and standardizing conditions such as exhibiting similar personal attributes to all
respondents, e.g., friendliness and support. Pilot testing was carried out by the researcher to
identify any flaws on the questionnaire to reduce errors of measurement and test for consistency

DATA ANALYSIS

The study applied both nominal and ordinal scale to measure a range of factors establishing the
effectiveness of internet advertising on consumer behaviour and an interval scale in determining
the relationship between internet advertising and consumer behaviour. Descriptive statistics was
used to analyze this data. The mean responses, standard deviation and other relevant statistics
were computed to better understand the data. The data collected was compiled and edited to
check for logical inconsistencies. The data was then coded according to the responses.
Relationships between responses was assessed and presented using tables and graphs and
analysis was done in this study to reveal relationships among variables in the findings from the
data.

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 LITERATURE REVIEW

INTRODUCTION

This chapter provides, through selective reference to some of the literature, a clearer
understanding of Internet advertising concept and outlines previous research findings on the
effectiveness of internet advertising based on measures of advertising effectiveness.

THEORETICAL FOUNDATION OF THE STUDY

Emotional appeals in advertising theory and classical conditioning theory in learning consumer
behaviour form the theoretical basis of this study. Extensive academic research has been
conducted on the psychology of emotion (e.g., Lazarus 1984) and the ways in which ad-evoked
feelings may influence consumer response to marketing communication (e.g., Batra and Ray
1986; Holbrook and Batra 1987). Scholars have also observed that advertising may evoke both
positive and negative emotions when seeking to persuade. Indeed, Brown, Homer and Inman
(1998, p.115), suggest that from a practical perspective, “the relative strength of positive and
negative feeling effects potentially could guide advertisers’ decisions regarding executional
strategies.”

It has been suggested that ads use positive affect to make consumers like the ad and then buy the
product, and negative affect to evoke an uncomfortable state that makes consumers want the
“solution” offered by the advertiser (Aaker, Stayman and Hagerty 1986). Unfortunately, there
are no guarantees that what the consumer actually experiences will be the affective response the
advertiser intended to create: Research has shown that this kind of mismatch between advertiser
intentions and consumer response occurs all too often (Cotte, Coulter and Moore, 2004; English
1990; Stout, Homerand Liu 1990).

These insights notwithstanding, a number of fundamental questions remain unanswered with

respect to ad appeals. Why, for instance, do these appeals induce such powerful consumer
responses in certain cases? What causes them to be more orless effective on consumers? With
specific reference to internet advertising, this study will attempt to answer these questions.
Classical conditioning is often referred to as a means in which humans learn by association. In
the classical conditioning paradigm, Pavlov’s Dog, a neutral stimulus is paired with an

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unconditioned stimulus to elicit an unconditioned response. For example, after repeated pairings
of meat (known to cause salivation) with the sound of a bell, the sound of a bell alone elicits
salivation. This association is dependent on two characteristics of the association: contiguity and
frequency. The law of contiguity states that in order for associative learning to take place, the
unconditioned stimulus and the neutral stimulus must be paired close in time to each other.
Furthermore, it is not enough for a neutral stimulus and an unconditioned stimulus to simply co-
exist in a close period of time. The more frequent the pairing, the easier it is to form an
association.

Proponents of applying classical conditioning to marketing believe that the association between a
product and positive stimuli may help explain the effect of many variables in communication and
attitude change. Gorn (1982) tested the effects of a positive unconditioned stimulus on product
preference. His results support the notion that the simple association between a product
(conditioned stimulus) and another stimulus such as music (unconditioned stimulus) can affect
product preferences as measured by product choice.

However, these effects were diminished in situations where consumers were in a clear decision
making mode. The learning’s of classical conditioning give us some insight on the characteristics
of an effectively branded Internet advertisement. First and foremost, the frequency with which an
ad is served impacts brand awareness. Frequency also impacts whether or not, an association
between a message and a brand, is made by a consumer.

INTERNET ADVERTISING

As a new advertising channel the Internet and particularly the World Wide Web (WWW)
portion of the Internet, are challenging traditional forms of mass media advertising (Hoffman and
Novak, 1996; Hearn, Mandeville and Anthony, 1998). Meeker (1998) defines a mass
communication medium as the communication from “one person or group of persons through a
transmitting device (a medium) to a large audience or market”. The Internet offers an interactive
alternative to mass media communication through the use of web pages, discussion groups and
email (Hoffman and Novak, 1996).

A significant advantage for advertisers will be the opportunity to communicate more directly
with individual consumers through this medium. Marketers will also be able to promote their

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products and services in a personalized, targeted manner to interested people within their target
market. Importantly, wastage of advertising and marketing funds often experienced when
exposing promotional messages to the mass market, may be reduced as a result of using this new
interactive medium. Advertisers will need to re-address their techniques, services and agency
structure and evolve new communication strategies for the Internet as market share is being lost
to this more personalized, interactive form of Internet advertising.

Schlosser et al., (1999) surveyed a national sample of over 400 participants and found no
majority opinion of Internet advertising-about a third of the participants liked, disliked, and felt
neutrally toward Internet advertising respectively. The Internet users found online advertising
was informative but less entertaining, and it did not encourage them to make purchases even they
did not perceive it to increase product prices. Korgaonkar and Wolin (2002) examined the
differences between heavy, medium, and light web users and concluded that “heavier users hold
stronger beliefs about and attitudes toward Web advertising which likely lead to stronger
purchase intent” (p: 201). Comparing with lighter users, the heavy Internet users believed that
web ads were more believable, entertaining, informative and helpful; but harder to understand.
They perceived that web advertising was a good thing, moderately essential, and it reduced the
cost of products. Marketers should include web advertising in their promotion efforts but the ads
should be designed with the respective user groups in mind. For example, ads targeted to heavy
web users should stress the price value relationship of the products, since they engage in more
frequent purchasing and believe that web advertising helps to decrease the prices of products.
Similarly, Ducoffe (1996) found that Internet advertising was perceived to be informative,
entertaining, useful, valuable, and important.

INTEGRATED MARKETING COMMUNICATION

The Internet has contributed to a greater adoption of integrated marketing communication (IMC)
strategies, by allowing marketers to communicate more directly with individual consumers
(Low, 2000). Internet functions become integrated into a company’s communications mix, which
permits the operation of the Internet as an advertising medium to be incorporated alongside more
traditional media types. The application of the IMC concept involves the progression away from
the traditional one-to-many marketing communication model for mass media to the one-to-one

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communication, or many-to-many communication model (as illustrated in Figure 2.2) (Hoffman
and Novak, 1996).

The inclusion of the Internet in the promotional mix will not eliminate the use of mass media
advertising channels such as television, radio, newspapers and magazines. However, the Internet
may reduce the amount of mass media advertising required. Arguably, this will occur because
the personal computer with Internet access is being utilized frequently by target audience
members as an effective communication channel to make both social exchanges using email and
commercial exchanges to purchase products on the web. The advertising industry is being
challenged to create more direct, personal and interactive communication with the target market
through the use of the Internet.

The influence of the Internet on business-to-consumer (B2C) relationships has introduced a new
dimension of interactivity to the communication industry (Shiva, 1997). Along with the
introduction of the Internet, advertising as a form of communication has become more
interactive. Traditionally advertising has involved the reduction of information about a product,
service or idea’s core benefits into a 30 second TVC, a full page color magazine advertisement,
or a 15 second radio spot, in order to persuade the target market to take action (Shiva, 1997).
However, while traditional advertising involves the reduction of information, the Internet enables
the advertiser to provide consumers with detailed information with no time or space restrictions.
Internet-based advertisers do not need to rely on traditional media channels, and are becoming
liberated from these limitations, thus taking advantage of interactive communication and
informing and educating consumers online.

Berthon, Pitt and Watson (1996, p. 53) argue that the WWW represents a “remarkable new
opportunity for advertisers and marketers to communicate with new and existing markets in a
very integrated way.” This is because the Internet, and in particular the WWW, frees consumers
from their traditional ‘passive’ roles as receivers of marketing communication and gives them
greater control over their information search and acquisition process. As a result, consumers are
now becoming interactive and more active participants in advertising and marketing processes
(Hoffman and Novak, 1996; Hoffman, Novak and Chatterjee, 1997).

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EFFECTIVENESS OF INTERNET ADVERTISING

Various researchers have studied numerous factors that might have an impact on Internet
advertising recall. The factors include ad characteristics, Internet users’ viewing mode and
duration of viewing, campaign publicity, attitudes toward the web site or ad, and curiosity and
innovative advertising strategy (Danaher and Mullarkey, 2003; Goldsmith and Lafferty, 2002;
Menon and Soman, 2002). Danaher and Mullarkey (2003) examined the effects of such factors
as viewing mode, visit duration, text and page background complexity, and the style of banner
ads on both aided and unaided recall. The authors did not find any significant impact of the web
site context factors on advertising recall. The key finding was that the duration of page viewing
is a strong determinant of the ability to recall banner ads; however, a minimum level of exposure
(around 40 seconds per page) is required to achieve a reasonable level of advertising recall.
Dreze and Hussherr (2003) also examined the effectiveness of ad characteristics on the ability to
recall ad. Animation content, the shape of the banner ad, and frequency of the ad (repetition)
leads to higher advertising recall but not the size of the banner. In addition, the authors reported
that “a banner’s message influences both aided advertising recall and brand recognition. This
indicates that what an ad says is more important than how it says it” (p: 21). In contrast, Yoon
(2003) found that banner image is more significantly effective than text to assess consumers’
preferences toward online ads. In terms of consumer responses in the form of liking online ads,
researchers such as Goldsmith and Lafferty (2002) and Metha (2000) have found that a more
favorable attitude towards ads can lead to a higher ability to recall ads. Goldsmith and Lafferty
(2002) found a significant relationship between positive responses to web sites and the likelihood
of recall the brands advertised on the web. The authors reported that “In general, research
suggests that those consumers who have a positive attitude toward an ad are more able to recall
than those with a negative attitude (p: 320). Metha (2000) made a similar conclusion but the
study was based on print advertising performance.

Click-through rate is a widely used measure for assessing the effectiveness of banner advertising,
which is the average number of times a viewer clicks on a pop-up ad and is then exposed to the
target web site (Dreze and Hussherr, 2003; Faber, et al., 2004). As reported by Cho (2003), “the
banner advertisement click-through is believed to be the most common way to draw consumers
into a target site and engage them with a brand or product

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CONSUMER BEHAVIOUR

According to Warner, consumer behaviour is the study of individuals, groups, or organizations

and the processes they use to select, secure, and dispose of products, services, experiences, or
ideas to satisfy needs and the impacts that these processes have on the consumer and society
(Malcolm). Warner emphasized the consumption related behaviors’ are often undertaken
collectively. For example, some activities performed by individuals but consumed by a family or
group of people, similar as 14 organization purchasing activities usually followed by group
decisions. Beside this point, the consumer behaviour is not just purchasing, but has usage and
disposal the goods, this type of information always be useful for company to make marketing
decisions (Malcolm). It blends elements from psychology, sociology, social anthropology and
economics, and attempts to understand the decision-making processes of buyers, both
individually and in groups. It studies characteristics of individual consumers such as
demographics and behavioral variables in an attempt to understand people's wants, and also tries
to assess influences on the consumer from groups such as family, friends, reference groups, and
society in general.

This definition clearly brings out that it is not just the buying of goods/services that receives
attention in consumer behaviour but, the process starts much before the goods have been
acquired or bought. A process of buying starts in the minds of the consumer, which leads to the
finding of alternatives between products that can be acquired with their relative advantages and
disadvantages. This leads to internal and external research. Then follows a process of decision-
making for purchase and using the goods, and then the post purchase behaviour which is also
very important, because it gives a clue to the marketers whether his product has been a success or
not (Malcom).

The black box model shows the interaction of stimuli, consumer characteristics, decision process
and consumer responses. It can be distinguished between interpersonal stimuli (between people)
or intrapersonal stimuli (within people). The black box model is related to the black box theory
of behaviorisms, where the focus is not set on the processes inside a consumer, but the relation
between the stimuli and the response of the consumer. The marketing stimuli are planned and
processed by the companies, whereas the environmental stimulus is given by social factors,
based on the economic, political and cultural circumstances of a society. The buyer’s black box

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contains the buyer characteristics and the decision process, which determines the buyer’s
response. Measuring customer behaviour is a crucial part of any business. Knowing what the
consumer wants and how he acts is vital in terms of product design, and marketing.

(Todd, 1997). Assessment of consumer behavior in specific situations, using observational and
physiological methods, is becoming increasingly important in understanding conscious and
unconscious consumer behavior. An increased understanding of consumer behavior may result in
the development of improved consumer products and in more healthy dietary patterns. A
growing number of techniques are available to assist researchers in measuring various aspects of
consumer behavior such as walking patterns, product selection, meal composition, and
eating/drinking. Due to advances in digital video, sensor technology and computer speed,
complex measurements of behavior and physiology are now possible. Integration of these
techniques allows multimodal measurements. With the growing number of techniques, the
challenge for the researcher to choose the right solution becomes larger. There are different ways
of measuring consumer behaviour, depending on the interest. Regularly conducting market
research allows businesses to know their customers, and take them into account when making
business decisions. This greatly improves business performance, and profits. Common
measurements includes, conducting a survey to determine consumer behaviour. There are two
main types of consumer survey: qualitative or quantitative. Qualitative studies involve asking a
few consumers a lot of in-depth questions. Quantitative studies involve asking lots of consumers
a few questions. The latter would be better for determining the market for a totally new product,
since you only need to find out if people would buy it. If you are amending a product, or making
one similar, a qualitative study would allow you to gain more detailed information. Similarly,
consumer behaviour would be measured by observing consumers going about their business
within permitted stores or shopping malls. By watching consumers, it is possible to discern a
great deal of information about their behaviour. Information such as optimum height and location
of a product and store layout is all gleaned from observational consumer behaviour measures.
Other techniques involve using raw data to provide a measurement tool. For example, releasing a
new product to the market, and observing if it is bought regularly in conjunction with another 16
product. If so, then an assumption can be made that it has a similar demographic to the second
product. Using the raw data to determine what time of day, or weather, or time of year people
buy a product gives information on consumer behaviour. Using separate objective and subjective

14
data obtained from an interview or survey. The primary data from respondents is used to make
objective judgment’s, which are free from bias.

INTERNET ADVERTISING AND CONSUMER BEHAVIOUR

The evolution of the Internet as a global communication infrastructure (Cae, 2000) has created a
new advertising channel for advertisers and advertising agencies to utilize and will provide
advertisers with the means to more cost effectively target their promotional messages to
consumers. Psychological factors such as thinking, feeling, sensation, and intuition directly
correlate with customers’ online advertising experience. Companies should aim to strengthen
customer interactions with advertisements on the Web, keeping both context and cognition in
mind. Unfortunately, most companies provide a generic experience to all customers rather than
relying on customer analysis to deliver a personalized experience. They’ve failed to innovate and
bring the online advertising experience to a whole new level of interaction and integration that
would truly let them achieve effective communication. As consumers experience and respond to
stimuli around them, emotions arise. Their reactions manifest themselves as physiological
changes they experience as feelings. Likewise, as people react to stimuli online—for example, to
an online advertisement—they have emotional responses that are directly proportional to their
reactions to these stimuli. On the other hand, when customers repeatedly experience the same
stimuli, they may not cause any emotional response. People become conditioned to ignore the
ever-present ads on Web sites, which is called ad blindness (Wolhandler, 1999). Advertising and
promotion offer a news function to consumers. As Yoo W., Suh K. and Lee M. (2002)
mentioned in their report, personal interactions with other customers and service providers play a
very important role while shopping online. Viewers of ads learn about new products and services
available to them, much like 17 they learn about events in the news. This information function
has a neutral role. It provides facts without approval or disapproval from consumers. Customer
behavior at this stage encompasses expressions of curiosity. Consumers have a rational response
to advertising when they look at the features of a product or service. This response focuses on a
logical listing of all the functional aspects of the offering. This is an intellectual response, rather
than an emotional one (Lee, 2002). When customers weigh benefits, they become emotionally
involved with advertising and promotion. Consumers identify ways the product or service can
make them happier, improve their lives or give them pleasure. This part of the consumer

15
response is irrational and can lead to impulse buying and competition to obtain the product.
Repeated advertising messages affect consumer behavior. This repetition serves as a reminder to
the consumer. Behavior that stems from reminders includes suddenly thinking of a product while
shopping and making a decision to buy it, as if it had been on the consumer’s "to-do" list (Lee
2002). Consumer behavior splits between loyalty and alienation depending on how well the
product lives up to its advertised benefits (Thorson, 2000). Corporate behavior – such as scandals
or charity work – can also affect alienation and loyalty responses. Once the consumer makes this
choice, advertising and promotion are not likely to undo that decision. The Cannon-Bard Theory
that Walter Cannon and Philip Bard advocated suggests human beings feel emotions first, and
then act upon them. When customers visit a Web site, the ads they encounter evoke an emotional
response—before they even decide what their next step should be. If ads don’t trigger customers’
emotions, they may not take any action in response. Based on the review of the research studies
mentioned above, it is clear that Internet advertising is gaining much attention and should be an
essential part of a marketer’s advertising media mix. The inconclusive findings call for further
studies on Internet advertising to gain more insight into consumers’ response and perception of
the Internet as an advertising medium. Hence, this study determined the effectiveness of internet
advertising as an ad medium, and its relationship to consumers’ response e.g. online purchase
decision.

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 INDUSTRY INTRODUCTION

Internet is changing the way consumers shop and buy goods and services, and has rapidly
evolved into a global phenomenon. Many companies have started using the Internet with the aim
of cutting marketing costs, thereby reducing the price of their products and services in order to
stay ahead in highly competitive markets.

Companies also use the Internet to convey communicates and disseminate information, to sell
the product, to take feedback and also to conduct satisfaction surveys with customers.
Customers use the Internet not only to buy the product online, but also to compare prices,
product features and after sale service facilities the will receive if they purchase the product
from a particular store. Many experts are optimistic about the prospect of online business.

In addition to the tremendous potential of the E-commerce market, the Internet provides a
unique opportunity for companies to more efficiently reach existing and potential customers.
Although most of the revenue of online transactions comes from business-to-business
commerce, the practitioners of business-to-consumer commerce should not lose confidence

.It has been more than a decade since business-to-consumer E-commerce first evolved. Scholars
and practitioners of electronic commerce constantly strive to gain an improved insight into
consumer behaviour in cyberspace. Along with the development of E-retailing, researchers
continue to explain E-consumers behaviour from different perspectives. Many of their studies
have posited new emergent factors or assumptions which are based on the traditional models of
consumer behaviour, and then examine their validity in the Internet context.

17
 INDUSTRY PROFILE

INDUSTRY INTRODUCTION

Internet is changing the way consumers shop and buy goods and services, and has rapidly
evolved into a global phenomenon. Many companies have started using the Internet with the aim
of cutting marketing costs, thereby reducing the price of their products and services in order to
stay ahead in highly competitive markets. Companies also use the Internet to convey
communicates and disseminate information, to sell the product, to take feedback and also to
conduct satisfaction surveys with customers. Customers use the Internet not only to buy the
product online, but also to compare prices, product features and after sale service facilities the
will receive if they purchase the product from a particular store. Many experts are optimistic
about the prospect of online business. In addition to the tremendous potential of the E-commerce
market, the Internet provides a unique opportunity for companies to more efficiently reach
existing and potential customers. Although most of the revenue of online transactions comes
from business-to-business commerce, the practitioners of business-to-consumer commerce
should not lose confidence .It has been more than a decade since business-to-consumer
E-commerce first evolved. Scholars and practitioners of electronic commerce constantly strive to
gain an improved insight into consumer behaviour in cyberspace. Along with the development of
E-retailing, researchers continue to explain E-consumers behaviour from different perspectives.
Many of their studies have posited new emergent factors or assumptions which are based on the
traditional models of consumer behaviour, and then examine their validity in the Internet context.

MODELS OF E-COMMERCE

BUSINESS-TO-BUSINESS (B2B): B2B e-commerce is simply defined as e-commerce

between companies. This is the type of ecommerce that deals with relationships between and
among businesses. About 80% of e- 25 commerce is of this type, and most experts predict that
B2B ecommerce will continue to grow faster than the B2C segment. Eg: indiamart.com,
eindiabusiness.com, tradeindia.com etc.

BUSINESS-TO-CONSUMER (B2C): Business-to-consumer e-commerce, or commerce

between companies and consumers, involves customers gathering information; purchasing
physical goods (i.e., tangibles such as books or consumer products) or information goods (or

18
goods of electronic material or digitized content, such as software, or e-books); and, for
information goods, receiving products over an electronic network. It is the second largest and the
earliest form of e-commerce. Its origins can be traced to online retailing (or e-tailing). Thus, the
more common B2C business models are the online retailing companies such as flipkart.com
Amazon.com, snapdeal.com etc.

BUSINESS-TO-GOVERNMENT (B2G): Business-to-government e-commerce or B2G is

generally defined as commerce between companies and the public sector. It refers to the use of
the Internet for public procurement, licensing procedures, and other government-related
operations. This kind of e-commerce has two features: first, the public sector assumes a
pilot/leading role in establishing e-commerce; and second, it is assumed that the public sector has
the greatest need for making its procurement system more effective. Web-based purchasing
policies increase the transparency of the procurement process (and reduce the risk of
irregularities). To date, however, the size of the B2G ecommerce market as a component of total
e-commerce is insignificant, as government e-procurement systems remain undeveloped.

CONSUMER-TO-CONSUMER (C2C): Consumer-to-consumer e-commerce or C2C is

simply commerce between private individuals or consumers. This type of e-commerce is
characterized by the growth of electronic marketplaces and online auctions, particularly in
vertical industries where firms/businesses can bid for what they want from among multiple
suppliers. It perhaps has the greatest potential for developing new markets online auction site
eBay; Yahoo! Auctions are a couple of examples of C2C websites.

M-COMMERCE

M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless technology-i.e., handheld devices such as cellular telephones and personal digital
assistants (PDAs). Mobile Commerce is any transaction, involving the transfer of ownership or
rights to use goods and services, which is initiated and/or completed by using mobile access to
computer-mediated networks with the help of an electronic device.

19
MOBILE COMMERCE IN INDIA

Mobile is growing in India with more than 800 million subscribers across the country. The
advancement in terms of adoption of smart phones with 3G enabled services is happening at a
rapid pace. This of course has opened up the gates to mobile advertising, mobile application
development and mobile commerce in India. According to Buzz City’s latest report, India is top
performing mobile advertising region in the whole of Asia. The growth in mobile advertising
globally is tremendous with ads served on a year-on-year growth of 139%. With respect to some
number crunching, more than 126 billion ads were served in 2011, compared with 52 billion in
2010. In India, Mobile Commerce is still in the development phase as the use of mobile phones
for carrying out transactions is very limited. However, the development is taking place at a nice
speed and in the coming years, Mobile Commerce is most likely to make its presence feel as
companies and businesses have started understanding the benefits of Mobile Commerce. Some
of the companies have even incorporated this technology. Airtel, ICICI, Reliance are some of the
companies/businesses that are using this technology as their users are allowed to make limited
purchases from their phones. For now, the users are mainly allowed to pay phone bills, utility
bills, book movie tickets, book travel tickets with their cell phones. However, more services will
be introduced in coming years. Security is one of the main 27 concerns of Mobile Commerce as
it’s very important to offer secure transactions and this is the reason why Mobile Commerce is
still in the development phase in India. For now, users are mainly allowed to do Mobile Banking
i.e. to access the bank account with a cell phone in order to pay the utility bills. With the current
rate of development, users will be soon allowed to purchase products, advertise, to take part in
auctions and pay bills with the help of a cell phone, while they are on the move.

ONLINE SHOPPING IN INDIA

The Indian economy is slated to grow by upward of 6 % annually in the next few years which is
among the highest rates of any big emerging economy. And quite a lot of this growth would be
on the back of domestic consumption of goods and services. E-commerce is emerging as a great
level given that organized retail is still not ubiquitous across the length and breadth of the
country with large retail chains making up less than 10% of the market. E-commerce is helping
people in smaller towns in India access quality products and services similar to what people in
the larger cities have access to. It’s being forecast that close to 60% of online shoppers would

20
come from beyond the top eight large cities by end of this year. Increasing internet penetration
has helped to expand the potential customer pool. Internet penetration is only about 10% (or
about 121 million users) as against about 81% in the US and 36% in China. However this
number continues to rise at a consistent pace because of falling prices for broadband
connections. Indians are also increasingly taking to mobile devices for not only search but
shopping as well.

The number of smartphone users is rapidly increasing in India and with 4G services about to
take off it’s expected to get even more people going online. There are currently about 900
million mobile subscribers and this number is expected to touch 1.2 billion by 2015. Of these
about 27 million are estimated to be active mobile internet users. More importantly, 20% users
indicated intent to buy products through their mobile phones as against the current 4% and this
number is expected to only increase in the next two to 28 three years. Innovation is helping e-
commerce companies break the inertia for online shopping by offering benefits to customers not
traditionally available in a brick and mortar store.

Business models include no question asked return policies ranging from 7 days to 30 days, free
product deliveries and the industry dynamics changing “cash on delivery” model. The last
innovation has really help unlock the potential as people can now order products and pay when
they get physical delivery of the product. This has been a tremendous success because Indians
are still reluctant to give their credit/debit card details online and want to have the psychological
comfort that they would actually get the product once payment has been made. These
innovations have led to further innovations downstream as ancillary businesses are developing to
support these initiatives.

Some companies have begun to develop support mechanisms for the entire cash on delivery
model and are trying to reach the far flung corners of India, including in the interiors where
traditional logistics companies are still not completely present. The logistics companies are also
shoring up their act and have started to build specific verticals and expertise to address the
requirements of e-commerce companies. Divyan Gupta is the Founder and CEO of Keshiha
Services Pvt. Ltd, a company with interests in the internet, telecom, healthcare, education and
advanced technology businesses has stated that, acceptance of online shopping as a secure
shopping mode is has also helped to increase ecommerce uptake. Currently only about 10 million

21
people do online transactions out of an approximate population of 200 million credit and debit
card holders.

However the latest industry report by First Data Corporation and ICICI Merchant Services
indicate that there are about 150 million users that are „ready‟ for e-commerce. More
importantly the report indicates that urban Indian consumers are now confident enough to make
online purchases of up to US$500 as against US$40-100 in the recent past. So not only are the
numbers of online shoppers projected to increase but there has been a real increase in the total
value being spent online. So what happens next for an industry which is 29 retailing everything
online- from flowers to baby products to books, coupons, apparels, music and electronic items to
even houses, cars and jewelry? While this e-commerce play is not like the earlier dot com
bubble, there are clear signs that order might be coming in amidst all the noise that is out there.
First a slow but sure consolidation is starting to take place in the industry.

Experts say that over the next 12-18 months there would be a couple of multi-product generalists
who would be successful along with a leader in single product category. Second, Venture
Capitalists are starting to be choosy about which business to invest in, basing their decisions on
performance as opposed to future predictions. Valuations which went through the roof are now
returning to normal levels. According to an Avendus report, about US$829 million was pumped
in the sector in the first 10 months in 2011. However this came down to US$16 million in
December 2011 and went up only marginally to. US$24 million in January of this year. Despite
all of this, it’s been a very impressive story so far. The poster child of the Indian ecommerce
industry is Flipkart.com, a 4 year old venture which modeled itself afterAmazon.com and is
already commanding a valuation of US$ 500 million and is targeting revenues of US$1 billion in
the next two to three years.

All of this has caught the attention of Amazon.com which entered the market in February this
year. It came in through Junglee.com, a price comparison site and is already amongst the top 10
sites in the country. Everyone is therefore trying to capitalize before the 800 pound gorilla comes
in fully on its own which is expected to be sometime around Q3/Q4 this year. There is huge
demand for top-notch professional grade web 2.0 consultancies and development. Very few
companies have a long term vision around customer acquisition, retention and constant
conversations. A lot more can be done in understanding the linkages between design and

22
functionality based on user experience and social integration. However to succeed in a tough
market like India your company needs to be open to long term strategic partnerships rather than
an upfront “pay for services” model. The upside would be worth its wait. 30 India has more than
3,311 running e-commerce centers, according to research conducted by eBay India for its 2011
census. Indian web is clouded with e-commerce (B2B, B2C, B2G, and C2C type business
models) startups and increasing like mushrooms on lawn. India- an upcoming super power has
more than100 million internet users which is keep on growing by introduction of 2G and 3G.
They want to be online always by any internet enabled gadgets. People are moving from street
bargaining to online web bargaining. The common Indian Mentality of “seeing and believing” or
“how it will look” is changing by introducing some creative business models like “cash on
delivery” by major e-commerce sites.

FACTORS WITH RESPECT TO WOMEN IN ONLINE SHOPPING

Shopping has been an obsession of women across the globe. A new shop in the neighborhood, a
new shopping mall in the area, a new brand launched – women are first to know and first to go.
When it comes to shopping, women are more organized (45% of women come to retail stores
with shopping-lists as compared 27% of men), regularized and they show some definite trends in
their buying behaviors. A woman is more likely to spend time in a retail store (29%) as
compared to her male counterpart (23%). When a woman visits a retail store or any physical
retail store she will consider a few important factors such as:

 How conveniently the store is located 

 Behaviour of the staff 
 Cleanliness (most of women are obsessed with it) 
 Products put at an easy reach so that she can check the label, feel it (if required) and
physically compare it with a similar product from a different manufacturer 
 Overall aesthetic decoration of the store 
 And most importantly – freebies and discounts available with the products naturally, the
same woman when she would visit an online retail store will look for these factors in her
sub-conscious mind. She would love to get the same feeling as she derives from the
environment of her favorite retail store. She will unknowingly demand these from your

23
 online shopping store. She would choose to stay and buy from your online web store if
you can meet the following:
 Save time: You should give her the navigational freedom and easy roam around options
in your store; give her instantly whatever she wants.
 Get a better selection: Your product should be the best in the designated price bracket 
 Complete product details: Do not describe your products in single words; give as much
detail as possible. 
 Better value/offer: Your freebies should be 'useful' enough and the discount should be
noticeable 
 Logistics: You must deliver the product right at her doorsteps and nowhere else! 
 Flexible return policy: Many times a woman takes a second opinion and you should
respect this nature. Be flexible if she asks you to replace what she has bought. 

24
 THE COMPANY PROFILE

Flipkart is an e-commerce company founded in 2007 by Sachin Bansal and Binny Bansal. The
company is registered in Singapore, but has its headquarters in Bangalore, Karnataka. Flipkart
has launched its own product range under the name "DigiFlip" with products including tablets,
USBs, and laptop bags. In May 2014, Flipkart received $210 million from DST Global, in July
2014 it raised $1 billion led by existing investors Tiger Global and South Africa's media group
Naspers and in May 2015 it raised $550 million from some of its existing investors. Flipkart's
last fundraising round in May 2015 had pegged its valuation at $15 billion. In February 2016,
Morgan Stanley, marked down its investment value to $11 billion. HISTORY Flipkart
(Company) was founded in 2007 by Sachin Bansal and Binny Bansal, both alumni of the Indian
Institute of Technology Delhi. They worked forAmazon.com, and left to create their new
company incorporated in October 2007 as Flipkart Online Services Pvt. Ltd. The first product
they sold was the bookLeaving Microsoft to Change the World to a customer from Hyderabad.
Flipkart now employs more than 33,000 people. Flipkart allows payment methods such as cash
on delivery, credit or debit card transactions, net banking, e-gift voucher and card swipe on
delivery. After failure of its 2014 Big Billion Sale, Flipkart recently completed the second
edition of Big Billion Sale held between October 13 and 17 where it is reported that they saw a
business turnover of 300 million in gross merchandise volume.

BUSINESS STRUCTURE
In a report dated November 25, 2014, a leading media outlet reported that Flipkart were
operating through a complex business structure which included nine firms, some registered in
Singapore and some in India. In 2012 Flipkart co-founders sold WS Retail to a consortium of
investors led by Rajeev Kuchhal.

ACQUISITIONS

25
  2010: We Read, a social book discovery tool.
 2011: Mime360, a digital content platform company.
 2011: Chakpak.com, a Bollywood news site that offers updates news, photos and
videos. Flipkart acquired the rights to Chakpak's digital catalogue which includes
40,000 filmographies, 10,000 movies and close to 50,000 ratings. Flipkart has
categorically said that it will not be involved with the original site and will not use
the brand name.
 2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought the
company for an estimated US$25 million. Letsbuy.com was closed down and all
traffic to Lets buy has been diverted to Flipkart.
 2014: Acquired Myntra.com in an estimated ₹20 billion (2,000 crore, about
US$319 million) deal.
 2015: Flipkart acquired a mobile marketing start-up Appiterate as to strengthen its
mobile platform.

INVESTMENTS

 In 2014, Flipkart invested $1 million in a Chennai-based electric vehicle (electric

scooter, electric motorcycle) startup Ather Energy.
 In 2015, Flipkart bought a minority stake in a Navigation and route optimization
startup MapmyIndia to help improve its delivery using MapmyIndia assets.

REGULATORY ACTION AND LAWSUITS

The Government of India informed the parliament in 2012, that it had asked the Enforcement
Directorate to investigate Flipkart Online Services. In August 2014, the Enforcement Directorate
claimed that it had found Flipkart to be in violation of the Foreign Exchange Management Act.
On November 30, 2012, Flipkarts offices were raided by the Enforcement Directorate.
Documents and computer hard drives were seized by the regulatory agency. Delhi High Court
observed violation of foreign investment regulations by E-Commerce firms including Flipkart. In
January 2016, public interest litigation came up for hearing which alleges Flipkart of
contravention of foreign investment norms. The court asked the Reserve Bank of India to

26
provide the latest circular on foreign investment policy. In January, 2016, the Department of
Industrial Policy and Promotion (DIPP) clarified that it does not recognize the marketplace
model of online retail. In February 2016, Health Minister, J P Nadda, informed that the
Maharashtra FDA had taken action against Flipkart, among others, for selling drugs without
valid license.

CRITICISM

On 13 September 2014, a Flipkart delivery boy molested a house maid in Hyderabad. The house
maid's employer has been fighting against Flipkart for justice on this issue, and also for making
offline delivery services safe. On 6 October 2014 Flipkart launched a promotion called 'Big
Billion Day' with the intention to increase the popularity of their website by targeting a billion
sales in 1 day. This, even though Flipkart achieved the target, led to public outcry and
widespread criticism among consumers, competitors and partners, heavily damaging its
reputation. Many users could not place orders because of high server load and errors which led to
frustration among customers. Many users who placed orders received emails stating that their
orders were cancelled. Most of the products were sold for less than cost price, and Flipkart was
accused of killing competition. Major competitors filed complaints against Flipkart to the
commerce ministry, claiming that selling products lesser than cost prices is against the commerce
policy of the country. The Ministry said that they would formulate new trade rules for electronic
retail after this incident. Flipkart received mass criticism on the subject of net neutrality after
their announced partnership with Airtel to use the Airtel Zero platform which would have made
the Flipkart app free for Airtel Users. On 14 April 2015 Flipkart retracted its decision to use
Airtel Zero platform.

IN-HOUSE PRODUCTS

 In July 2014 Flipkart launched its own set of tablet, mobile phones & Phablet. The first
among these series of tablet phones was Digiflip Pro XT 712 Tablet.
 In July 2014 Flipkart launched its first networking router, under its own brand name
named DigiFlip WR001 300 Mbit/s Wireless N Router.

27
  In September 2014 Flipkart launched its in-house home appliances and personal
healthcare brand Citron. The label includes a wide range of cooking utilities and
grooming products.

FLYTE DIGITAL MUSIC STORE

In October and November 2011, Flipkart acquired the websites Mime360.com and
Chakpak.com. Later, in February 2012, the company revealed its new Flyte Digital Music Store.
Flyte, a legal music download service in the vein of iTunes and Amazon.com, offered DRM-free
MP3 downloads. But it was shut down on 17 June 2013 as paid song downloads did not get
popular in India due to the advent of free music streaming sites.

EXCLUSIVE PRODUCT LAUNCHES

Motorola Mobility, previously owned by Google but then sold to Lenovo, in an exclusive tie up
with Flipkart launched its budget smartphone Moto G in India on 5 February 2014; more than
20,000 units were sold within hours of launch on Flipkart. After this Flipkart was looking for a
long term tie up with Motorola Mobility, They also launched their Android smartphone, the
Moto X, on 19 March 2014. Flipkart later sold the Moto E, cheaper than Moto G, from 13 May
2014. The sale of high-end smartphone Xiaomi Mi3 produced by Xiaomi Tech was launched in
India on an exclusive tie-up with Flipkart. The first batch was sold out within 39 minutes on 22
July 2014, the second in 5 seconds on 29 July 2014. The sale was preceded on pre-registration
mode where more than 150,000 buyers booked for the 5 August 2014 sale. This got sold off in
less than 2 seconds. Following this Xiaomi Tech sold 20,000 units in the next sale on 12 August
2014. On 2 September 2014 Flipkart held a flash sale of the Xiaomi Redmi 1S budget Android
smartphone which was launched in India in July 2014. 40, 000 units priced at Rs 5999 each were
sold within seconds. A further 40,000 units were sold within 4.5 seconds on Sept 9, 2014. The
third Redmi 1S sale on Sept 16, 2014 sold 40,000 units in 3.4 seconds; In the 4th round of sale of
Redmi 1S, 60,000 units sold in 5.2 seconds on Sept 23, 2014. On 30 September 2014 60,000
units sold in 13.9 seconds. Redmi Note in India exclusively through Flipkart; 50,000 units sold in
6 seconds on 2 December 2014.

28
 DATA ANALYSIS, RESULTS AND DISCUSSION

INTRODUCTION

This chapter presents analysis and findings of the study as set out in the research methodology.
The results were presented on the effectiveness of internet advertising on consumer behaviour of
Hyderabad Students. The study objectives were; to determine the effectiveness of internet
advertising on reach and creation of awareness; to establish the reliability of internet advertising
through recall; and to determine the relationship between internet advertising and purchase
decision. The study targeted 100 respondents out of which all the 100 respondents responded and
returned their questionnaires contributing to a response rate of 100%. This response rate was
sufficient and representative and conforms to Mugenda and Mugenda (2003) stipulation that a
response rate of 50% is adequate for analysis and reporting; a rate of 60% is good while a
response rate of 70% and over is excellent. This commendable response rate was due to extra
efforts that were made via courtesy calls made to remind the respondents to fill-in and return the
questionnaires. The chapter covers the demographic information, and the findings based on the
objectives. The findings were then presented in tables, graphs and charts as appropriate with
explanations being given in prose thereafter.

BACKGROUND INFORMATION

The study initially sought to ascertain the general information on the respondents involved in the
study with regards to the year of study, age, and gender. The demographic information points at
the respondents’ suitability in answering the questions on the effectiveness of internet advertising
on consumer behaviour. The respondents were asked to indicate their year of study. The study
findings are illustrated

29
 1. Distribution of the Respondents by Year of Study?

YEARS FREQUENCY PERCENTAGE

First Year 20 20
Second Year 29 29
Third Year 33 33
Fourth Year 18 18
Total 100 100
Source: Field data. Table 1

Graph 2.1

18% 20%

First Year
Second Year
Third Year
Fourth Year

33% 29%

INTERPETATION: As shown in table 1 the study sample was representative of all the
years of study with the third year students forming the highest proportion of the sample.

30
2. Distribution of the Respondents by Age Bracket?

AGE BRACKET FREQUENCY PERCENTAGE

19-25 years 82 82
26-35 years 18 18
Total 100 100
Source: Field data. Table 2

Graph 2.1

18%

19-25 years
26-35 years

82%

INTERPETATION: The findings indicate that majority of the students at the university
of Hyderabad were aged 19-25 years.

3. Gender Distribution of the Respondents?

31
 GENDER FREQUENCY PERCENTAGE
Male 72 22
Female 28 28
Total 100 100
Source: Field data. Table 3

Graph 2.3

44%
Male
Female
56%

INTERPETATION: the study recorded a higher response rate from males than females in their
various years of study.

Effectiveness of Internet Advertising on Reach and Creation of Awareness

32
The first objective of the study was to determine the effectiveness of internet advertising on
reach and creation of awareness. The study sought to establish whether the respondents were
aware of various forms of advertisements adopted by various companies. Majority of the
respondents (98%) attested to being aware of various forms of advertisements adopted by
various companies. This illustrates that the effectiveness of internet advertising on reach and
creation of awareness was determined by the level of knowledge about the existing platforms of
advertisements adopted by various companies in India. The respondents were asked to indicate
their attitude towards advertisements.

4. Attitude towards Advertisements?

ATTRIBUTES FREQUENCY PERCENTAGE

Informative 35 35
Creates awareness 31 31
Entertaining 25 25
Irritating 3 3
Annoying 3 3
Waste of time 3 3
Total 100 100
Source: Field data. Table 4
Graph 2.4

3%
3% 3%

35% Informative
Creates awareness
25% Entertaining
Irritating
Annoying
Waste of time

31%

33
INTERPETATION: As shown in Table 4 most of the respondents (35%) indicated that

advertising was informative, with a closer percentage indicating creation of awareness. 3%

indicated that advertising was either irritating, annoying or a waste of time. These findings mean

that most of the respondents had a positive attitude towards advertising as illustrated by their

various perceptions about the use of advertising. This clearly shows a positive attitude toward

advertising and hence is a good indication for marketers. In order to further identify the

effectiveness of internet advertising on 24 reach and creation of awareness, the respondents were

requested to indicate the amount of time spent on various platforms of advertising. The responses

were rated on a five point Likert scale where: 1=less 1hr, 2=1 - 2hrs, 3=2 - 4hrs, 4=4 - 6hrs while

5=over 6hrs.

5. Time Spent on Various Platforms of Advertising?

34
 ATTRIBUTES MEAN STANDARD DEVIATION
TV, Movies 2.42 1.241
Newspaper, Mags 1.11 1.372
Radio 1.03 0.927
Internet 4.21 0.515
Total 100 100
Source: Field data. Table 5

Graph 2.5

4.5 4.21
4
3.5
3
2.5 2.42

2
1.5 1.241 1.372
1.11 1.03 0.927
1
0.515
0.5
0
TV, Movies Newspaper, Mags Radio Internet

MEAN STANDARD DEVIATION

INTERPETATION: According to the findings in Table 4.5, on an average, a person spends

more than 4 hours on the internet during his free time which is more than that of TV and movies,

radio and print medium. Hence, on an average the exposure of internet to an individual is around

40% more than that of other mediums i.e. the reach of medium internet is much better than that

of others.

 The study sought to establish whether the respondents watched the TV/ or listened to
Radio commercials during commercial break.

35
 6. Watching the TV commercials during commercial break?

RESPONSE FREQUENCY PERCENTAGE

Yes 70 70
No 30 30
Total 100 100
Source: Field data. Table 6

Graph 2.6

30%

Yes
No

70%

INTERPETATION: According to the findings, the majority of the respondents attested to

watching the TV/ commercials during commercial break. This implies that for television

commercials, around 70% of consumers had a positive perception towards advertising on TV.

7. Do you Change the Channel during Commercial Breaks?

36
 ATTRIBUTES FREQUENCY PERCENTAGE
Never 26 26
Sometimes 17 17
Depends on Add 33 33
Often 13 13
Every time 11 11
Total 100 100
Source: Field data. Table 7

Graph 2.7

11%

26%

13%
Never
Sometimes
Depends on Add
Often
Every time

17%

33%

INTERPETATION: Respondents were asked to indicate if they changed channels during

commercial and the results were tabulated. Table 7 shows that the degree of attractiveness of the

advert and its relevance to the respondents determined their attention to the advert. The viewers

would see the advertisement if the ad is attractive and appealing. Hence there is a probability of

0.75 of a consumer viewing the particular advertisement (for creating awareness and

information) on television making it an effective mode of communication.

37
  Reliability of internet advertising through recall: The second objective of the study
was to establish the reliability of internet advertising through recall. First, the respondents
were asked whether they would check an online advertisement.
8. Checking an online advert?

RESPONSE FREQUENCY PERCENTAGE

Yes 21 21
No 79 79
Total 100 100
Source: Field data. Table 8
Graph 2.8

21%

Yes
No

79%

INTERPETATION: In case of online advertising, majority (79%) of consumers ignored the

advert completely while 21% indicated that they would check an online advert. Further the study
found out that, out of the 21%respondents, 15% said that the intention was not to see the ads, but
they didn’t have any option but to see them as they were Interstitial 26 Adverts, Pop – up ads or
Floating ads. These ads either block the view of the content, or appear right in the middle of the
page, or keeps on floating (moving) around which is considered to be very irritating for the
consumers. Checking the ads determined the level of interaction with the online ads. Therefore,
even though the reach of internet is much higher than that of other modes, its ability to attract
consumers for awareness creation is very low. The respondents were further asked to indicate
their purpose.

38
 9. Internet usage?

ATTRIBUTES FREQUENCY PERCENTAGE

Chatting & Social Networking 18 18
E- mail 30 30
Information 25 25
Entertainment 12 12
E- Commerce 1 1
Downloading 14 14
Total 100 100
Source: Field data. Table 9

Graph 2.9

30
25
30
25 18
20 14
12
15
10
1
5
0

PERCENTAGE

INTERPETATION: As shown in Table 9, 30% of the respondents used internet for E-mail,

25% for information, and others for chatting and social networking, indicating that

communications has been the fundamental value of the internet to consumers. There was a

higher chance of interaction with various online ads as reflected by the diverse usage of internet.

39
  To establish the reliability of internet advertising through recall, the respondents were
asked to indicate whether they would recall the last three TV and online ads.
10. Ad recall?

Recall
Response Frequency Percentage
Yes 84 84
TV
No 16 16
Yes 30 30
Online Ad’s
No 70 70
Total 100 100
Source: Field data. Table 10

Graph 2.10

90 84
80
70
70
60
50
40
30
30
20 16
10
0
Yes No Yes No
TV Online Ads

INTERPETATION: This is for the last three ads that they had seen consciously or
unconsciously. In case of TV ads, 84% remembered their last three ads which is a very good
score in terms of creating awareness. In case of online ads, only 30% could remember their last
three interactions with the online ads. Therefore, one can easily make out the reliability of online

40
and TV ads recall values. The study found out that TV ads are much reliable than internet
advertising and other forms of advertising.

Relationship between Internet Advertising and Purchase Decision: The third objective of
the study was to determine the relationship between internet advertising and purchase decision.
Respondents were asked to indicate the mode advertising that mostly influenced their decision to
purchase a product. The results were tabulated in Table 11.

11. Mode of Advertising Influencing Intention to Buy Product?

ATTRIBUTES FREQUENCY PERCENTAGE

Magazines and newspaper 17 17
Friends and relatives 40 40
TV Commercial 29 29
Online advertisements 6 6
Social Media – Blogs, forums,
8 8
Social Networking sites
Total 100 100
Source: Field data. Table 11

Graph 2.11

40

40 29
30 17
20 6 8
10
0

41
INTERPETATION: Based on Table 4.10 above, the highest number of students, 40% of the

respondents were influenced to buy a product based on information provided by friends and

relatives, with TV commercials being second. Online advertisements were least in influencing

their decision at 6%. Therefore, friends and relatives were the major influencers behind decision

making. This depicts that traditional form of advertising has an edge over internet advertising in

terms of consumer preference to mode of advertising. Traditional mode got over 86%

preferences than that of internet advertising which is a huge margin. Secondly, the respondents

were also asked to indicate whether the internet ads they came across influenced their purchase

decision. 52% of the respondents indicated that the internet ads they came across never

influenced their purchase decision while 48% posited that the internet ads they came across

influenced their purchase decision. This depicts that the internet advertising influenced purchase

decision of the customers to a moderate extent as only nearly half of the respondents were

influenced purchase decision.

42
 12. STATEMENTS ON INTERNET ADVERTISING AND PURCHASE DECISION

1 2
Statements on Internet advertising and purchase decision
Mean Standard Deviation
Internet advertising influences customers’ purchase decision 4.21 0.513
duration of page viewing is a strong determinant of the
4.13 0.746
ability to recall banner ads
Animation content, the shape of the banner ad, and
frequency of the ad (repetition) leads to higher advertising 3.92 0.841
recall
Companies should aim to strengthen customer interactions
4.11 0.62
with advertisements on the Web
Most companies provide a generic experience to all
customers rather than relying on customer analysis to 4.01 0.738
deliver a personalized experience.
When customers weigh benefits, they become emotionally
4.05 0.673
involved with advertising and promotion.
Repeated advertising messages affect consumer behavior.
3.98 0.847
This repetition serves as a reminder to the consumer
Source: Field data. Table 12

INTERPETATION: The study established that Internet advertising influences customers’

purchase decision (Mean=4.21) and duration of page viewing is a strong determinant of the

ability to recall banner ads. Other factors as repeated advertising messages affect consumer

behavior. This repetition serves as a reminder to the consumer (Mean=3.98), and that animation

content, the shape of the banner ad, and frequency of the ad repetition leads to higher advertising

recall .This implies that the internet advertising is a key determinant of purchase decision of the

customers as they consider it to be an interaction point between them and the company from

which they buy their products from.

43
 DISCUSSION OF FINDINGS

The study established that the effectiveness of internet advertising on reach and creation of

awareness was determined by the level of knowledge about the existing platforms of

advertisements adopted by Students of Hyderabad. Most of the respondents had a positive

attitude towards advertising as illustrated by their various perceptions about the use of

advertising. This clearly shows a positive attitude toward advertising and hence is a good

indication for marketers. The findings augment the findings of Baltas (2003) who indicated that

marketing is perceived by the internet users as a major source of information on available

product in the market as reflected by their positive attitude in the world over. According to

Calisir (2003) internet advertising is an effective channel for marketing as the ad is attractive and

appealing which changes from time to time.

The study established that even though the reach of internet is much higher than that of other

modes, its ability to attract consumers for awareness creation is very low. The study concludes

that the reliability of internet advertising through recall was low as only a small percentage of the

respondents could recall the online ads they had seen. The study found that TV ads are much

reliable than internet advertising and other forms of advertising. The findings are corroborated

with Danaher and Mullarkey (2003) who posited that TV ads are much reliable than internet

advertising. The study established that friends and relatives were the major influencers behind

decision making. This depicts that traditional form of advertising has an edge over internet

advertising in terms of consumer preference mode of advertising. Traditional mode got high

preferences than that of internet advertising which is a huge margin. According to Cho (2003) in

44
the developing economies the traditional form of advertising has a greater market share

compared with the internet advertising in terms of consumer preference mode of advertising.

The study established that internet advertising influenced purchase decision of the customers to a

moderate extent as only nearly half of the respondents were influenced purchase decision. The

study established that internet advertising is a key determinant of purchase decision of the

customers. The study also established that internet advertising has significant relationship with

purchase decision of the consumers. The findings augment earlier findings of Goldsmith and

Lafferty (2002) that internet advertising is a key determinant of purchase decision by the

customers and that internet advertising has an association with purchase decision of the

consumers.

45
 SUMMARY OF THE STUDY

The study found that the effectiveness of internet advertising on reach and creation of awareness

was determined by the level of knowledge about the existing platforms of advertisements and

time spent on these media. On average, a person spent more than 4 hours on the internet during

his free time than that of TV and movies and print medium and therefore the reach of internet

medium is much better than that of other media. A higher percentage indicated that they were

made aware of existence of various products through internet advertising and therefore it was

effective in creating awareness. The study revealed that the ability of the respondents to recall

the internet ads was low compared to TV, and therefore even though the reach of internet is

much higher than other forms, TV ads are much more reliable than internet advertising Danaher

and Mullarkey (2003). Internet advertising is a key determinant of purchase decision of the

customers as they consider it to be an interaction point between them and the company from

which they buy their products from. The study also established that internet advertising has

significant relationship with purchase decision of the consumers.

46
 CONCLUSION OF THE STUDY

The objective of the study was to determine the effectiveness of internet advertising on

consumer behaviour using a sample of Hyderabad students. After analysis of the study findings,

the study concludes that the effectiveness of internet advertising on reach and creation of

awareness was determined by the level of knowledge about the existing platforms of

advertisements adopted by various companies in India and time spent on various media. Internet

advertising was effective in providing higher reach and creation of awareness. However, in spite

of 36 the diverse usage of internet and wide interaction with various internet advertisements,

fewer respondents were able to recall the internet ads they had seen. This implies that the

reliability of internet advertising is quite low. The research established that TV advertising is

more reliable than internet advertising therefore conforming to Danaher and Mullarkey (2003),

that TV ads are much reliable than internet advertising. The study concludes that internet

advertising influenced purchase decision of the customers to a moderate extent as only nearly

half of the respondents were influenced purchase decision. However, internet advertising is a key

determinant of purchase decision of the customers as they consider it to be an interaction point

between them and the company from which they buy their products from. The study also

concludes that internet advertising has significant relationship with purchase decision of the

consumers. The study further concludes that internet advertising contributes most to the

consumer behavior and that internet advertising was a significant factor in predicting the

47
consumer behaviour. In addition, there is a positive relationship between consumer behaviour

and internet advertising. This implies that companies should invest more in internet advertising

to increase their market share and conduct a market research on the different markets in various

countries to ensure that the internet advertising initiatives being implemented suits the targeted

markets to improve product purchases.

48
 RECOMMENDATIONS OF THE STUDY

The study established that the reliability of internet advertising is low and therefore recommends

that the management of companies using internet advertising should provide unique experience

to its customers based on customer analysis to deliver a personalized experience to the

customers, Calisir (2003). The study also found that internet advertising is effective in reach and

creation of awareness and recommends that the companies should invest more in internet

advertising to increase their market share and provide product information. Finally, the study

determined that there is a positive relationship between internet advertising and consumer

purchase decision and further recommends that companies should conduct a market research on

the different markets in various countries to 37 ensure that the internet advertising initiatives

being implemented suits the targeted markets to improve product purchases. This is because

there exist different contextual realities between different markets Wolin (2002).

49
 SUGGESTIONS FOR FURTHER STUDIES

Since this study explored the effectiveness of internet advertising on consumer behaviour: the

case of University Students, the study recommends that a similar study should be done in a

private university for comparison purposes and to allow for generalization of findings on the

effectiveness of internet advertising on consumer behaviour. As an suggested by Gong and

Maddox (2003), “future research can look into the impact of web advertising across different

countries and cultures to enhance the global understanding of web advertising effectiveness”

50
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53
 RESEARCH QUESTIONNAIRE

SECTION A – BACKROUND INFORMATION

1. Year of study?

☐Year I ☐Year II ☐Year III ☐Year IV ☐Other, Specify _____

2. Age Group (yrs.): ☐ up to 18 ☐19 to 25 ☐26 to 40 ☐41 to 55 ☐ 55 +

3. Gender: ☐ Male ☐ Female

4. Programme enrolled in?

☐ Module I ☐Module II

5. Where is your place of residence?

☐University Hostels ☐Other, specify _____

SECTION B – ATTITUDES, REACH AND AWARENESS

6. Do you like Advertisements?

☐Yes ☐No

☐Informative ☐Irritating

☐Entertaining ☐Annoying

☐Creates awareness ☐Waste of time

7. How much time do you spend on?

TV, Movies ☐< 1hr ☐1 - 2hrs ☐2 - 4hrs ☐4 - 6hrs ☐> 6hrs

Newspaper, Mags ☐< 1hr ☐1 - 2hrs ☐2 - 4hrs ☐4 - 6hrs ☐> 6hrs

Radio ☐< 1hr ☐1 - 2hrs ☐2 - 4hrs ☐4 - 6hrs ☐> 6hrs

54
Internet ☐< 1hr ☐1 - 2hrs ☐2 - 4hrs ☐4 - 6hrs ☐> 6hrs

8. Do you watch the TV/ or listen to Radio commercials during commercial break?

☐Yes ☐No

☐Informative ☐Irritating

☐Entertaining ☐Annoying

☐Creates awareness ☐Waste of time

9. I change the channel during commercial breaks…

☐Never ☐sometimes ☐depends on ad ☐often ☐every time

SECTION C: AD RECALL

10. Which is the last Newspaper/Magazine ad you remember? Which brand was it?

11. Which is the last TV commercial you remember? Which brand was it?

12. Name any three TV commercials you remember lately

1._______________________________

2._______________________________ 3. _______________________________

13. Do you see/check online ads/mails when you surf the internet?

☐ Never ☐ sometimes ☐depends on ad ☐ often ☐every time

14. Which is the last online ad you remember? Which brand was it?

__________________________________________________________

15. Name any three online ads you remember lately

1._______________________________

2._______________________________ 3.____________________________

SECTION D: INFLUENCERS, PREFERENCE AND PURCHASE DECISION

16. You use the internet for? (Rank them in order of your preference)

☐Chatting and Social Networking ☐_____

☐Email ☐_____

55
☐Information ☐_____

☐Entertainment ☐_____

☐E -Commerce ☐_____

☐Downloading ☐_____

17. What mode of advertising influences you to buy any product?

☐Magazines and newspaper

☐Friends and relatives

☐TV Commercial

☐Online advertisements

☐Social Media – Blogs, forums, Social Networking sites

18. Which mode of advertising would you prefer? (Rank in order of preference)

☐TV Commercials ☐_____

☐Print Ads: Newspaper, Magazines ☐_____

☐Banners, Posters ☐_____

☐Online Ads: Banners, Emails, ☐_____

19. Have you made any purchases after seeing internet ads?

☐ Yes ☐ No

20. What is the relationship between internet advertising and purchase decision Please tick where
appropriate: 5-To a very great extent, 4-To a great extent, 3-To a moderate extent, 2-To a little
extent, and 1-To no extent.

1 2 3 4 5
Statements on Internet
To a To a very
advertising and purchase To No To a Little To a great
moderate great
decision Extent Extent extent
extent extent
Internet advertising influences
customers’ purchase decision
duration of page viewing is a
strong determinant of the
ability to recall banner ads

56
Animation content, the shape
of the banner ad, and
frequency of the ad
(repetition) leads to higher
advertising recall
Companies should aim to
strengthen customer
interactions with
advertisements on the Web
Most companies provide a
generic experience to all
customers rather than relying
on customer analysis to
deliver a personalized
experience.
When customers weigh
benefits, they become
emotionally involved with
advertising and promotion.
Repeated advertising
messages affect consumer
behavior. This repetition
serves as a reminder to the
consumer

57