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TV Shopping:Decision Making for Buying Overseas Travel Packages

from TV Shopping Channel -ET Mall

Selina Hsin 忻維冰 94933006Lisa Wei 魏汝倩 93933006Jim Chen 陳詩鈞 95933008

Professor Charles TrappeyIMBA Marketing

National Chengchi UniversityDecember 30, 2006

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Table of Contents

Abstract......................................................................................................................................3Introduction................................................................................................................................5

History of TV Shopping Channel.......................................................................................5Eastern Home Shopping.....................................................................................................6

Literature Review.......................................................................................................................9Consumer behavior model.................................................................................................9

Marketing Promotion...............................................................................................................10Methods....................................................................................................................................15

Hypothesis........................................................................................................................15Data Collection.................................................................................................................16

Results......................................................................................................................................17Demography.....................................................................................................................17Decision Making..............................................................................................................18Impulse Buyers.................................................................................................................21

Discussion................................................................................................................................25Recommendations............................................................................................................25

References................................................................................................................................27Appendix I................................................................................................................................29

Abstract

It is fact that TV has become a part of the modern life and serves more than the media of

providing entertainment and information. It has also become particularly popular as a media

or channel for retail business since TV shopping network established in the past decades.

This report aims at looking into consumer behavior in buying overseas travel packages from

the TV shopping channel.

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Based one the consumer decision process model by Engel-Blackwell-Miniard Model

(Engel, Blackwell, Miniard,1993), originally developed by Engel, Kollat and Blackwell in

1968, the consumer decision is influenced by various cultural, social and personal factors. In

this report, we focus on the marketing promotion of TV shopping program. We believe the

marketing promotion has great influence on decision process, particularly on the information

searching process and alternative evaluation process. Thus, we formed four hypotheses to

review the relationship between the marketing promotion and the buying decision.

Our hypotheses are 1) Females between 25 and 35 are most likely to purchase overseas

travel packages via TV shopping channel; 2) The introduction and promotion of the host or

hostess is the main factor for buying decision making; 3) Limited availability and price

comparison table have strong influence on buyers' purchasing behaviours; and 4) The

majority of the purchases are impulsive.

We use a local Taiwan TV shopping channel, ET mall, as our case and conduct a survey

of 60 people who already had experience buying the overseas travel packages from ET mall.

We exam the results plotted a number of distribution graphs. The results show that females

between 25 and 35 are most likely to purchase overseas travel packages via TV shopping

channel; the introduction and promotion of the host/hostess are important but not the most

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important factor for buyer’s decision making, and the limited availability and price

comparison table also have similar results; and lastly, we find the majority of the purchases

are impulsive purchase. Additionally, from the survey, we find that payment methods and

free gift stand out to be the most important factors for decision making.

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Introduction

History of TV Shopping Channel

The Home Shopping Network (HSN, www.hsn.com), the first TV shopping channel

founded in Florida in 1982 and now the second largest player in the United States, is a mostly

24-hour shopping network that is seen on cable, satellite, and some terrestrial channels in the

United States. Currently, the number one TV shopping channel in U.S. is Quality Value

Conveniences (QVC, www.qvc.com); the net sales is more than US$ 6.5 billion, and nearly

10 million U.S customers shopped for QVC.

The third largest TV shopping in the world in 2004 is LG Home Shopping which

changed its name at April 1st of 2005 to GS Home Shopping ( www.geshop.co.kr). GS Home

Shopping occupies 35% of the market share in Korea.

The first TV shopping channel in Taiwan, “ Wireless Quick Buy TV Shopping

Channel(無線快買電視購物頻道)”, is founded in 1992. The market of TV Shopping grew

rapidly from NTD 120 million in 1993 to NTD 3.6 billion in 1995 and reached NTD 10

billion till 2002. After 2002, the TV Shopping companies started to merge. Currently, there

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are 3 major TV shopping channels, ET MALL (Easter Home Shopping), MOMO and VIVA.

From the media research of ACNielson, the monthly viewers of infomercial channels have

grown from 2.49million in 2000 to over 15 million in 2005.

Eastern Home Shopping

Eastern Home Shopping (ET MALL) is one of the subsidiaries of Eastern Multimedia

Group (EMG, table 1). Paid-in Capital is NTD 500 million for Eastern Multimedia Group. In

January of 1999, ET MALL introduced T-commerce and launched its first Taiwan-based

station. Currently there are four EHS channels.

Figure 1: Eastern Home Shopping

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ET Mall provides seven commitments to their members

1. Quality Assurance

2. Door to door delivery within 7 days

3. Interest free installment by credit card

4. 10-day trail period

5. Door to door free return and replace service

6. 24/7 hours toll-free service line

7. 365 day in service

Figure 2: ET Mall’s seven commitments

From its seven commitments, ET MALL develops its brand equity. Now, ET

MALL is the leading TV Shopping channels provider, with around 85% market share. The

total revenue grew rapidly from NTD 500 million in its first year to NTD 28 billion within

five years (catalogue selling 3.3billion; internet selling:1 billion). The estimated revenue is

over NTD 38 billion in 2006. (Travel package is around NTD 4 billion)

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Now, ET MALL provides eight different product categories through their TV

shopping channels including Jewelry, Clothing, Beauty, Food, 3C, Home, Travel,

and Books.

Since ET MALL launched its TV station in December of 1999, ET MALL

has reached following achievements

1. ET MALL is the first Taiwan T-commerce by providing live shopping broadcasting, and

later on ET MALL extends Live broadcasting from 17 hrs to 20hrs

2. First to sell cars through TV Shopping channels; sold 250 Honda CR-V cars in one hour

3. First TV Shopping channel to hit revenue of NTD 100 million a day

4. First to sell travel package on TV

5. Reach 3.2 million members before Dec 2006

In order to keep the leading position, ET MALL should not only form

strategic alliance and introduce new brand into its product mix, but also continue

to improve their IT systems. ET MALL launched its ET1 platform, a virtual

information management system developed with TATA Consultancy Services that provides

an unprecedented level of service integration across platforms, from suppliers to customers in

September of 2006.

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Literature Review

Consumer behavior model

The study on consumer behavior has changed dramatically due to the introduction of e-

business and TV shopping network. Analyzing how consumers think, feel, reason, and

behave when exposed to many different alternatives has been the main focus of psychologists

and marketers. The business must constantly adapt the latest findings in order to improve

their marketing campaigns and strategies more effectively. The consumer purchasing

behavior is commonly viewed as the needed fulfillment or problem solving. The most

popular consumer behavior model is the Engel-Blackwell-Miniard Model which originally

developed by Engel, Kollat and Blackwell in 1968.

The core of the EBM model is the decision process, which include five main stages:

need recognition, search, pre-purchase alternative evaluation, purchase, and post purchase

stage. During the stage of searching, the variables of culture, social, family, situation, and the

personal factors will influences the potential buyer. And belief, attitude and intention will

have influences on the alternative evaluation process.

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Figure3 (EBM) consumer decision process model

Marketing Promotion

The most noticeable marketing promotion methods we observed and used to design our

survey are as below (see appendix I for TV film clips),

1. Free gifts—additional gifts, cash points, vouchers, or lucky draw if purchased on-line.

2. Payment method (installment)—working with the credit card company to allow payment

can be made in twelve month or twenty-four month instead of once in all. The perceived

value is thus higher than simply low price.

3. Price comparison list –usually current market price or competitors’ price will be made a

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comparison list with ET Mall’s price. ET mall usually strikes for a range of 20%-30%

lower than market or competitor price. This is also targeted at consumers’ perceived value.

4. Limited time and product availability—each program section is 40 minutes with

introduction at the beginning and count down toward the end of the program in the last

fifteen or twenty minutes. The products sold on the program will also be described as

“once only and never again” or “limited edition” to emphasize the limited availability. By

keeping reminding the consumer the limited availability, ET Mall will increase the

consumers’ anxiety and need to make the decision in a relatively sort time.

5. Flexibility in changing schedule—ET Mall offers its customers to book their package first

and then decide the actual departing date later in order to encourage consumer to place

order first. Consumers will feel there is a lower risk since they can always return the

product if they decided not to purchase after all at no cost.

6. Guaranteed 10 day trial and free refund—Consumers can purchase the package with a ten

day trail/consideration period. If the consumers regret, they can get the refund with no

additional costs within ten days. This greatly lowers the risk level perceived by the

potential customers.

7. Introductory Film—the program will play the film introducing the actual itinerary: the

place of interests, hotel, and highlights of the trip to attract consumers. Since most

consumers will have some places in their memory where they wanted to go, the real film

will trickle the memory and the motivation to purchase.

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8. Marquee and banner—the pop out marquee and moving banners sometimes provide

current selling status, additional free gifts, or other types of information. Other times they

present irrelevant information, such as weathers and reports. Such information providing

may be too much for the consumers to analyze; it is quite difficult to keep track of all the

information as the program progresses.

9. Background music—depending on the program, there may be fun and exciting music

played in the background. As the end of a program approaches, the pace of the music will

become faster and more exciting. Consumers will feel exciting and be pushed to speed up

the decision process.

10. Host or hostess promoting—they usually serve as information providers and advisers.

Typically, a host or hostess will be accompanied by a representative from a travel agency.

The host or hostess will ask a lot of detailed questions. From time to time, the host hostess

will also act as if they are on the consumers’ side and ask the representative to provide

additional price-cut or free gifts.

The first six promotion methods target the consumers’ perceived value. Consumers feel

like they are getting a wonderful bargain with relatively low risk when they purchase an

overseas travel packages from ET Mall; if they go to any other companies, they will not find

a similar offer. Items seven to ten are situational factors that aim to increase the chances of

making the purchase decision.

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The behavior of consumers when making decisions may be limitations by their knowledge

or information processing abilities. Consumers may also be influenced by varied interest or

motivation in their decision process when facing different products. However, the promotion

methods above target the perceived value and lower risk, which are very essential aspects to

the information searching and evaluation of alternatives in consumer behaviors.

Some history survey on TV shopping results in Taiwan had shown more female tend to

purchase products than males. The age group of more frequent purchaser was raged around

35 years old. The result may also relate to the development of the TV shopping channel and

acceptance through time or economic changes. However, the results shown consumers are

more female and at younger or mid-age group with average income. Some history survey

results done regarding to the demography are summarized below.

Table 1: history survey on demography resultsgender occupation Marital status age income

Tsai, Kuo-Tung (1995)Yu-Hsien Peng (1999)

Female House wives

31-40 10000

Li, Xiu-Zhu (1999) Slightly more Female

More married Lower than the non-shopper

Hsieh, Beng-Yen (2003) Female 30,000-60,000Wu,Ya-Mei (2004) Female married 31-40Ma, Jung-Ray (2004) Male:Female

=1:3House wives

married 30-49

Pei, Pei-I (2004) Female 20-35E-ICP (2005) Male:Female

=3:7House wives

30-39

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(張淑安 Shu-An Chang, 2004)

Branding

By examining the branding map of ET Mall, we discover a couple traits. Although ET

Mall is a private corporation, it enjoys the reputation of low financial risk because of its

successful mother company. ET Mall is also known for its friendly 24/7 service, which is a

plus for building relationship with consumers. Furthermore, ET Mall has successfully linked

itself with the words bargain and convenience. When people think of ET Mall TV shopping,

cheap and readily available are often the first words that go into their minds. Since ET Mall

operates a TV shopping business, it is rather weak in the influencer area. The host or hostess’

vivid description and questioning and the travel experts’ words only help in relationship

influence. Unfortunately, currently ET Mall is not able to cover any other area through

influencers. Understanding its inherent limitation, ET Mall invests huge efforts in its

branding strategy. Many of its strategies are aimed directly to improve its brand name. For

example, to improve the experience influence aspect, which is ET Mall’s weak link, ET Mall

provides potential consumers lively films that feature the detailed itinerary of the destination.

Other branding strategies include many of the promotion methods mentioned earlier, such as

10 day trial period or price comparison list. Overall, ET Mall is recognized as one of the

most dominating brand in the TV shopping business that constantly offers bargains.

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Methods

Based on the literature review and the observation the overseas travel package program

on ET Mall, we design the questionnaire according to four parts: to identify and the check the

frequency of purchase, to identify which of the marketing promotion contributed the most to

the decision making in consumers, to identify whether the purchase is compulsive, and to

analyze the demography of consumers.

Our first draft of survey did not target the consumers we intended because we also asked

question of their internet on-line shopping experience. So we have to leave the first draft and

retarget only on consumers who already had experience purchasing overseas travel packages

from ET Mall.

Hypothesis

H1 -Females between 25 and 35 are most likely to purchase overseas travel packages via

TV shopping channel.

H2-The introduction and promotion of the host/hostess is the main factor for buying

decision making.

H3-Limited availability and price comparison table have strong influence on buyers'

purchasing behaviours.

H4-The majority of the purchases are impulsive

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Data Collection

At first we go out on the street and randomly hand out our survey. After a preliminary

run, we realize we have to modify our survey strategy. Most of the people we encounter on

the street have little or no TV shopping experiences. Due to the nature of the survey—the

questions are very specific, we decide not to randomly distributed; inputs from people who

have not purchased overseas packages through TV shopping channel before are mostly

speculations, and contribute little to our research. In the end, we hand out 80 surveys and

collect 60 from mostly people who have previously purchased overseas packages on TV

shopping channel.

Results

Demography

Initially we plan to survey across a randomly selected population. Unfortunately, we

find out that we have to modify our targeted population and choose people who have bought

overseas packages through the TV shopping channel. As a result, most of the people are

selected from our social circle. This can bias the results of the survey, especially the

demography. Consequently, even though the demography of the population supports our

hypothesis—in our surveys, 40% of the consumers are females between 25 and 35, we cannot

confidently conclude that this distribution is true for the overall population. To firmly

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support this hypothesis, another survey across a random population is required.

Table 2: Demograpgy

7%2% 2%

22%

5% 12%

40%

3%7%

2%0%

10%

20%

30%

40%

50%

< 25 26~35 36~45 46~55 > 56

Male Female

Decision Making

To analyze the consumers’ decision making behavior, we focus on two questions. First,

what part(s) of the television program is (are) important? We divide the television program

on a shopping channel into eight components: the texts that appear on the screen, the number

of available packages left, the actual film of the destination, the schedule of the trip, the table

of price comparison, the free gifts used for promotion, the background music, and the

presentation of the host. The three most import components are the introductory film for the

destination, the price comparison table, and the gifts associated with the travel package—

none of the three says much about the actual travel product. Other than the price comparison

table, which can be easily manipulated by neglecting some hidden cost, the three most

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important components to a customer also have little relation with price. Clearly, the three

things a customer cares most about are promotion related.

Table 3 : Marketing Promotion Factors

12%

48%

28%

40%

47%

5% 5%

55%

0%

10%

20%

30%

40%

50%

60%

Marquee &Banner

PackagesLeft

IntroductoryFilm

Schedule PriceComparison

Gifts Music Host

Next we ask the consumers what factor(s) would make them purchase the travel

products immediately. The top three factors are limited products in limited time, intended

destination, and cheaper price with installments—three very promotion oriented factors. To

our surprise, the top factor is cheaper price with installments. We view the installment policy

mainly as a method to lower the customers’ guards; instead of allocating a major portion of

money, the customers can pay gradually over a long period of time. On the other hand, the

limited availability factor is intended only to rush the buyers’ decisions. Potential buyers are

constantly exposed to the idea that the travel products they see will soon be sold out. Hence,

the buyers will be inclined to purchase the product on the spot. We examine the unexpected

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results and find what we overlooked in our hypothesis. Although the host or hostess always

says the product is about to be sold out, or the offer is about to expire, the exact same product

often comes up again a couple days later. This greatly reduces the host’s or hostess’

credibility, and experienced buyers, expecting to see the product soon in the future, will no

longer take the limited availability seriously. Moreover, not having to commit a huge amount

of money is much more important to buyers than we expected. Attempting to match buyers’

intended destination is another technique used by ET Mall. By selecting popular tourism

sites and present the potential buyers fabulous films about the destination, it is easy for ET

Mall to make the buyers think that place is where they want to go. Finally, the cheaper price

is merely an illusion. Often times the price comparison tables presented during the television

show are faulty and biased. ET Mall tends to hide some costs associated with the purchase

and display the listed prices, which are usually higher than the actual prices, for their

competitors.

Table 4: Marketing promotion factors for decision making

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10%

53%

35%

45%

27%

38%

45%

0%

10%

20%

30%

40%

50%

60%

Cheap &Installment

Return &Replacement

Attractive Gifts IntendedDestination

Lively Film EnthusiasticHost

LimitedAvailability

Evidently, the consumers’ decision makings are mostly influenced by ET Mall’s

promotion techniques. ET Mall successfully covers its weakness—a poor product line—by

magnifying the power of promotion. First the buyers are introduced to films and price

comparison tables that make ET Mall’s products seem like bargains they do not want to miss.

Then the buyers are pressed for time because the products are always “limited.” With a

positive impression toward the product and a lack of time, people are more likely to make

impulsive purchases.

Impulse Buyers

While we wish to figure out whether or not a buyer is an impulse buyer, we cannot

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simply ask them that question. In fact, if we ask a person whether or not his or her purchase

is planned, he or she will probably answer yes. To overcome this problem, one of the survey

questions asks about the details of the trip. When a person purchases an overseas package

before finalizing the specific members, schedule, budget, and destination of the trip, his or

her decision is likely impulsive. According to the survey results, about 35% of the people

buy the travel product with nothing planned ahead; these people are definitely impulse

buyers, since they buy without knowing how they would use the product. For the rest 65% of

people, we come up with an assumption: people who are uncertain about either their party

members or their destinations are also impulse buyers. We do not assume people who have

not decided on their budgets impulse buyers because after talking to some of the surveyors, it

appears that a lot of people have a wide acceptable budget range. Most of our survey targets

are uncertain about their departure dates because being able to decide the date after purchase

is one of the advantages for travel packages sold through TV shopping channel. Therefore,

we also do not consider people who have not planned the exact date of their trip as impulse

buyers. According to the survey result, only about 5% of the people have decided both their

destinations and their party members prior to their purchases. This means that the majority of

the consumers are impulse buyers.

Table 5: Impulsive purchasing

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What People Have Decided Prior to Their Purchase

28%

37%

3%13%

43%

0%

10%

20%

30%

40%

50%

PartyMember

DepartureDate

Budget Destionation None of theAbove

Another piece of information to examine is people’s television-watching behavior.

Because of the unpredictability of the program scheduling of TV shopping channels and the

lack of a timetable, it is difficult for a person to watch the programs often unless he or she

spends a lot of time on watching television. In fact, more than half of the buyers only pay

attention to the programs on the shopping channel when they accidentally see the program,

and it does not take long before they switch the channel again. Since most people spend little

time watching the shopping programs and make their decisions quickly, their purchases are

likely impulsive.

Table 6: TV shopping channel watching frency

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How Often do People Watch TV Shopping Channel

0%

10%

20%

30%

40%

50%

60%

Once a week Every Other Day Everyday Rarely

Finally, we examine why people choose ET Mall TV shopping channel over other

sources for overseas travel products. Interestingly, when we ask people what edge does ET

Mall TV shopping channel has over other sources, the answers are very diversified and quite

evenly spread out. Even gifts and installments, which are two major factors that influence

buyer’s decision making, receive relatively low votes. We think this result has a lot to do

with the fact that the majority of the customers are impulse buyers. If a person purchases on

impulse, he or she does not analyze all possible options carefully and often do not know why

he or she purchases the item. As a result, when we ask an impulse buyer what advantage ET

Mall has over other sources, they tend to come up with a random answer.

Table 7: ET mall TV shopping program

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ET- Mall's Advantage

0%5%

10%15%20%25%30%35%40%45%50%

Host/ Hostess Lively Film Gifts &Installments

Refundable Flexible Date

From the three figures above, we conclude that the customers of ET Mall TV shopping

channel for overseas package are mostly impulsive buyers. The majority of them do not

intend to buy a travel product when they start watching television, and their decision making

processes are usually rushed.

Discussion

Recommendations

Based on our survey results, we offer ET Mall a couple pieces of advices. First of all,

many of the buyers (53%) like the freedom to make their payments gradually over a period of

time. We think ET Mall should recognize this fact and introduce even more payment plans.

Secondly, according to our survey, female buyers dominate the market (73%). It is quite

clear that when ET Mall introduces new product lines, it should focus on popular travel sites

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among women. Thirdly, ET Mall’s customer satisfaction can use some improvement.

Currently, 30% of the buyers say they either will not purchase overseas travel packages

through TV shopping channel ever again or will unlikely to do so in the future. Constantly

losing 30% of the customer base can be quite a burden for a company; we think ET Mall

should definitely try to increase the number of repeat buyers. Fourthly, about half of the

people (47%) think ET Mall needs to present a clearer price comparison table. Programs on

ET Mall shopping channel provide a lot of, sometimes too much, information. In general,

viewers have a difficult time absorbing and digesting all the information in a program. We

think ET Mall should try to simplify the contents when it presents a price comparison table.

Then the viewers will be able to see and realize ET Mall is offering a bargain immediately.

Finally, a little advice from our group: ET Mall should release their program schedule. As we

mentioned above, there is available program schedule, and buyers have no clue when they

will be able to see the program. We understand that ET Mall may be hiding their schedule as

a strategy to avoid direct competition with other TV shopping channels. However, given that

ET Mall is currently the most dominating brand in TV shopping, we believe it should not be

afraid of the competitions. By releasing its program schedule, potential buyers can watch the

program more often. This should benefit ET Mall in the long run.

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References

Blackwell, D. R., Miniard, P. W. and Engel, J.F., “Consumer Behavior”, 1993, 9th ed. ,

Harcourt, Inc.

Card, J. A., Chen, C. Y. and Cole, S. T.（2003）,“Online Travel Products Shopping:

Differences between Shoppers and Nonshoppers,” Journal of Travel Research,

42, pp.133-139.

Gillett, P. L.（1976）,”In-Home shoppers: An overview,” Journal of marketing, 40（4）,

pp.81-88.

吳雅媚 Wu, Ya-Mei (2004).台灣地區電視購物消費者購買決策之研究 A Study of the

Consumer Purchase Decision on the TV Shopping in Taiwan.碩士論文

Master's thesis, 銘傳大學 Ming Chuan University, 台灣 Taiwan.

貝佩怡 Pei, Pei-I (2004). 探討電視購物行為之購買動機 The study of purchase motivations

in TV shopping channel. 碩士論文 Master's thesi, 成功大學 National Cheng

Kung University, 台灣 Taiwan

東森購物網路商城 ET Mall. Retrived December10, 2006, from

http://www.etmall.com.tw/Pages/TVSHOP.aspx?

&PH=TopMenu_TVSHOP&WT.mc_id=TVSHOP_TopMenu_TVSHOP

東森購物總經理 宋湘嵐 最會賺錢的「購物女王」an interview with general manager of ET

Mall general manager Retrived December 10, 2006, from

http://blog.etmall.com.tw/blogs/ehspr/archive/2006/12/06/50199.aspx

張淑安 Chang, Shu-An(2004). 電視購物消費者決策過程研究 A Study of Consumer

Decision Making Process on the TV Home Shopping Channel, 碩士論文

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Master's thesi, 交通大學 National Chiao-Tung University, 台灣 Taiwan

陳怡萍 Chen, I-Ping (2005, Aug), 東森購物靠明星 SALES 拼業績 ET Mall use star

host/hostess to creat sales[Electronic version]. 遠見雜誌 Globalview

Magazine, (230)

無店鋪經營學-電視購物新兵篇 每個富邦員工都是 MOMO 台促銷點 no-store retailing

Momo TV shopping network . Retrived December1, 2006, from

http://www.techvantage.com.tw/content/051/051110.asp

無店鋪經營學-電視購物霸主篇 一天 1 億元，東森購物超級秀 no-store retailing-ET Mall,

Retrived December 10, 2006, from

http://www.techvantage.com.tw/content/051/051104.asp from

營收不再成長－東森購物如何 Show me the money? 遠見雜誌 Globalview Magazine,

2006. 2

東森購物網站購物網站 ET Mall office website. Retrieved Dec 28, 2006, from

http://www.etmall.com.tw/Pages/TVSHOP.aspx?

&PH=TopMenu_TVSHOP&WT.mc_id=TVSHOP_TopMenu_TVSHOP

東森購物公司網站 Eastern Home Shopping Company. Retrieved December 10,

2006, from http://www.emg.com.tw/emg/index-en1.htm

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Appendix I

13

Limited time & amount

500 worldwide limited edition!!

Lines are now full!!

38 seats left!!

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14

Price comparison

Normal market price vs. ET Mall price!!

15

Free gifts & additional bonus points

Free gifts and more!!!

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16

Lucky draw

Buy now and lucky draw today!!

17

Price deduction

(1st time ever in 7 years, don’t miss it!!

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18

Interest-free instalment via credit card company

Only NTD 1,908 /day

19

Program hosthostess

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20

Hokkaido (Japan) 7 days for NTD29,800