Enhanced security features for internet-based shopping sites are the key motivators influencing American consumers' future online buying habits, according to a new study, 'MasterCard Internet Consumer Segmentation Research', conducted for MasterCard International by Hamill Associates during the fourth quarter of 2002.
After interviewing more than 1,000 consumers, the study revealed that the most important factors influencing the degree to which they would make purchases online were:
- Assurances that personal information would be kept private;
- A guarantee that they would not receive unwanted e-mails as a result of purchases;
- An extra layer of security for credit card transactions.
"Internet retailers should take a close look at this study because it indicates that extra security programmes and assurances will motivate consumers to shop online," said Steve Orfei, senior vice president for MasterCard International's e-commerce and e-B2B centre for excellence.
According to the study, online security is a very broad issue that impacts all consumer segments, despite other lesser factors varying greatly from segment to segment. For example, when asked about major factors influencing future online purchasing:
- Nearly three-quarters (73%) of the study's participants agreed that enhanced security features would influence their decision to purchase online in the next three months.
- Some 70% are concerned about security and fraud issues.
- More than half of the respondents (61%) are concerned that their credit card number will be intercepted by "hackers".
It also pays to encourage consumers to use the internet more and more, it seems. The study showed that the 'depth' of internet usage (the number of activities regularly carried out online) grows in proportion to the length of time they spend online.
The least experienced group of users, dubbed 'technology sceptics', had an average online tenure of 3.8 years, and an average of only four online activities performed regularly. In contrast, the most experienced group, dubbed 'confident core users', averaged 5.9 years online, and carry out ten activities regularly.
In addition, the sceptics' activities were largely communications-related, while the core users' activities encompassed a much wider variety including shopping, travel, and information access.
MasterCard's research was also used to gather segmentation information, including data on attitudinal and behavioural dimensions, and credit card usage behaviour. As a result, the study identified five main consumer groups which exhibit unique profiles in terms of behaviour, attitudes, and lifestyles:
- Confident Core Users: This group represented 22% of study participants. As experienced internet users, they showed the greatest depth and breadth of web usage and online buying among all the segments, fully integrating the benefits and functionality of the internet into their lives. Approximately 18% of their overall credit card spending happens online. However, although they are shopping online the most, this group still has moderate concerns about internet security.
- Cautious Shoppers: This group represented another 22% of study participants. While they are similar to the confident core users in that they are largely internet-savvy, they exhibit a lower online spend, and are less experienced at using the internet for financial and credit card activities. This group differentiates themselves from the confident core users and mainstream users (see below) in that they are more concerned about online credit card fraud.
- Mainstream Users: This group represents another 22% of the study's participants. Mainstream users are not as deeply involved in the internet as core users and cautious shoppers, and cited many of the same security concerns as the cautious shoppers. However, they still use the internet for a variety of activities, mostly centred on time-saving, entertainment activities, and on light online purchasing.
- Curious But Not Convinced: Representing 23% of participants, this group have low levels of online purchasing experience, and lower usage of online products and services, but are just beginning to recognise some of the benefits of using the internet. They also exhibited a high level of concern regarding internet security.
- Technology Sceptics: The smallest of the groups, the technology sceptics represent only 11% of participants. They are the least experienced internet users with low utilisation across all areas. They have the most concerns about internet security, privacy, and technology in general. As a result, they are more comfortable with traditional shopping channels.
"This segment-specific attitudinal analysis implies that key security and privacy concerns inhibit online buying among consumers with even 2-4 years of experience online," said Orfei. "It also suggests that online retailers and issuers can and should do more to ease consumer fears."
The study, which was commissioned to examine internet usage behaviour, focusing on online purchasing patterns and to understand the consumer mindset associated with personal e-commerce, also measured awareness, penetration and consumer assessment of e-commerce tools.
Hamill Associates surveyed a total of 1,024 consumers in the USA, from a nationally representative sample of banked adults with internet access, in which half of the participants are male and half are female. Consumers were recruited and screened by telephone, and sent to a web site to complete the survey. Participants were required to be 18-69 years old, own a general-purpose payment card, have a personal e-mail address, have been online in the past 30 days for personal use, and have a household income of US$15,000 or more.