Pappas, Nikolaos (2016) Marketing strategies, perceived risks, and consumer trust

in online buying behaviour. Journal of Retailing and Consumer Services, 29. pp.
92­103. ISSN 0969­6989

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 Marketing Strategies, Perceived Risks, and Consumer Trust in Online Buying

Behaviour

ABSTRACT

Despite the rapid increase in online shopping, the literature is silent in terms of the

interrelationship between perceived risk factors, the marketing impacts, and their

influence on product and web-vendor consumer trust. This research focuses on

holidaymakers’ perspectives using Internet bookings for their holidays. The findings

reveal the associations between Internet perceived risks and the relatively equal

influence of product and e-channel risks in consumers’ trust, and that online

purchasing intentions are equally influenced by product and e-channel consumer trust.

They also illustrate the relationship between marketing strategies and perceived risks,

and provide managerial suggestions for further e-purchasing tourism improvement.

Keywords: Planned Behaviour; Perceived Risk; Travel and Tourism; Consumer Trust
1. Introduction

There is a growing need for new knowledge, theories and models of Internet

consumer behaviour due to the evolution of electronic commerce as it becomes a vital

aspect of customer relations and marketing strategy (Close and Kukar-Kinney, 2010).

The online purchasing behaviour needs to be further understood (Herrero and San

Martin, 2012) hence, it attracts increasing research attention (Mosteller et al., 2014).

As several studies have pinpointed, the key to long-term success for e-retailers is to

build consumer trust (Suh and Han, 2003; Pavlou and Fygensen, 2006; Vos et al.,

2014), but the latter is negatively influenced by the perceived risks (Hong and Cha,

2013; Kamarulzaman, 2007) associated with both products (Ward and Lee, 2000) and

web-vendors (Jiang et al., 2008). Thus, it is important to examine the risk factors

affecting trust in Internet shopping, whilst the purchasing intentions of online

consumers need to be further investigated.

In tourism, the Internet has considerably altered consumers’ behaviour since it gave

them the opportunity to directly interact and engage with suppliers and tourist

destinations (Buhalis and Law, 2008). Online shopping has changed tourist behaviour

since for travel suppliers it represented a new and potentially powerful

communication means for product distribution (Law et al., 2004), contributing to the

minimisation of the gap between consumers and suppliers (Xiang et al., 2015).

Nowadays, tourists use the Internet not only to gather information about tourist

products and destinations, but also to buy tourist products, even if this behaviour is

less extensive (Law et al., 2010). In 2011 the Internet generated world-wide revenue

of more than 340 billion US dollars, establishing it as an important channel for

distributing travel and tourism products (Amaro and Durate, 2015). Even if the
popularity of Information Technology (IT) has led to extensive research on IT and

tourism (San Martin and Herrero, 2012), the literature is somehow silent in terms of

consumers and their online purchasing intentions (Law et al., 2009; Amaro and

Durate, 2015). Thus, further research examining consumer motivations to buy travel

and tourism products online is necessary (O’Connor and Murphy, 2004).

The paper focuses on online perceived risks (with reference to travel and tourism

products) and synthesises previous research aiming to assess the impact of risks in

consumer trust and ultimately in purchasing intentions. In order to achieve this it

examines the impact of product (Sparks and Browning, 2011) and web-vendor (Gefen

et al., 2003) trust on purchasing intentions (Kim et al., 2008). It also evaluates the

effect of product price and quality risks (Sanchez et al., 2006) on consumer trust in

products, and in parallel it evaluates web-vendor quality (Ahn et al., 2004; Hong and

Yi, 2012) and security (Hong and Yi, 2012) risks with regard to consumers’ trust in

e-channels. Furthermore, it estimates the effect of marketing strategies (Chikweche

and Fletcher, 2010) on risk minimisation associated with both products and web-

vendors. The paper contributes to the theoretical domain in two ways.

First it establishes the considerable marketing influence upon the formulation of

perceived risks, and the way the latter impact on products and web-vendors. Second,

it provides a thorough examination of the way different perceived risks (product price,

product and web-vendor quality, web-vendor security) are interrelated with each other.

From a managerial perspective, the paper also contributes in two ways. First, the

study provides substantial evidence for the impact of perceived risks in consumer trust.

Finally it enhances our understanding of product and web-vendor consumers’ trust in

terms of the purchasing intention formulation.

2. Conceptual framework and hypotheses

2.1. Marketing strategies

The literature suggests that appropriate advertising may change the attitudes of

consumers towards a specific product (Petty et al., 1983) and decrease the perceptions

of product risk (Kopalle and Lehmann, 2006). Even if both direct and indirect

marketing can play an important role in consumer decision making, direct marketing

initiatives may be more influential in purchase determination than media based

methods such as television, radio and print (Brown and Reingen, 1987; Chikweche

and Fletcher, 2010). In addition, marketing can significantly influence consumer

beliefs about product performance (Nerkar and Roberts, 2004) and finally determine

their likelihood to buy (Leenders and Wierenga, 2008). Still, product performance and

quality are aspects also connected with branding. The perceived quality of the product

is associated with its brand, since consumers evaluate the quality of a product in terms

of its brand name (Huang et al., 2004). This creates a causal relationship for many

consumers that a recognised brand is usually associated with a high quality product

and good performance (or usability), thus, a good brand strengthens the benefits

which are expected of a potential purchase (Rubio et al., 2014).

In online shopping, with the passage of time the variety of marketing channels is

increasing, as is the complexity of consumers’ purchasing behaviour (Coughlan et al.,

2001). Consumers tend to switch between e-channels when buying products mainly

because of the considerably increased financial, security and performance risks the

Internet presents in comparison with offline shopping (Lee, 2009). Thus, they tend to
buy the products and use the web-vendors that offer high quality and low risk (Chiu et

al., 2011). As a result, e-retailers adjust their marketing strategies and focus on the

minimisation of product and web-vendor risks (Chikweche and Fletcher, 2010; Chiu

et al., 2011). Still, little is known about the impact of marketing strategies on

perceived risks with respect to products and online channels. These discoveries led to

the creation of the following hypotheses:

H1: Product marketing strategies have a negative impact upon product price risks

H2: Product marketing strategies have a negative impact upon product quality risks

H3: Web-vendor marketing strategies have a negative impact upon web-vendor

quality risks

H4: Web-vendor marketing strategies have a negative impact upon web-vendor

security risks

2.2. Product risks

One of the key elements in buying behaviour is risk (Kumar and Grisaffe, 2004; Pires

et al., 2004) which is defined as an attribute of an alternative decision reflecting the

variance of its possible outcomes (Gefen et al., 2002). As Dholakia (2001) suggests,

perceived risk is somehow involved in all purchase decisions, especially in those

where the outcome is uncertain. In online shopping, the consumers who prefer

Internet transactions to traditional purchasing are the ones who have low-risk

avoidance profiles (Juan, 1999). Thus, whenever consumers alternate, postpone, or

cancel their purchase, it is an important indication that they perceive the existence of

risk (Hong and Yi, 2012).

Online consumers perceive more risks than those shopping in stores for three reasons:

(i) they cannot examine the product before they receive it, (ii) they are concerned

about after-sales service, and, (iii) they may not fully understand the language used in

e-sales (Hong and Yi, 2012). In online purchasing it is impossible for the consumers

to evaluate the product quality, because no actual contact for further clarifications

with a salesperson is possible (Gutierrez et al., 2010), whilst the e-buyers can not

examine the product in person before they receive it (Hong and Yi 2012). As a result,

perceived risks have been found to significantly affect the purchasing decisions of

online consumers (Antony et al., 2006). This justifies the rationale that in numerous

cases online consumers decide to make their purchase only after walking into a store

and touching, feeling, or even trying out the product (Kim et al., 2008). When this is

not possible because of the product characteristics (i.e. intangibility in tourism

industry products), online consumers try to gather as much information as they can

before purchasing, whilst they also engage in customer-to-customer (C2C)

communication, especially with respect to price and quality (Bjork and Kauppinen-

Raisanen, 2012). Moreover, e-commerce itself has intangible qualities, leaving

consumers uncertain that a chosen product will both fit their needs and meet their

expectations (Weathers et al., 2007). As a consequence, the perceived product risks

are greater when the provided product information is limited and consumers have a

low level of self-confidence in their brand evaluation (Bhatnagar and Ghose, 2004).
The product elements that crucially determine the consumers’ purchasing decisions

are price and quality (Sanchez et al., 2006). In terms of price, as the monetary value

of the product increases, the perceived risks involved in purchasing the product also

increase (Dowling, 1999). The financial risk deals with “the likelihood of suffering a

financial loss due to any hidden costs, maintenance costs or replacement cost due to

the lack of warrantee and a faulty product” (Kiang et al., 2011). In parallel, the

qualitative aspects of a product place value on its final performance, where

expectations are compared to the result (Sanchez et al., 2006). Quality is connected

with performance risk, and concerns the potential failure of a product to meet the

expected quality/performance requirements (Kiang et al., 2011). Hence, the following

hypotheses have been formulated:

H5: Product price risks have a negative impact upon product consumer trust

H6: Product quality risks have a negative impact upon product consumer trust

The price-quality schema (according to Lichtenstein et al., (1993, p.236), this is “the

generalised belief across product categories that the level of the price cue is related

positively to the quality level of the product”) indicates that consumers use price for

the evaluation of overall product excellence or superiority (Zeithaml, 1988). Thus,

price-quality schema does not focus on actual product quality, but on the consumer’s

belief in the relationship between quality and price (Lichtenstein and Burton, 1989).

As also indicated by Kim and Jang (2013) many consumers perceive that price and

quality are highly correlated. The consumers develop these beliefs through their own

consumption experiences (Smith and Natesan, 1999), and are likely to pursue high
priced products in an effort to achieve better quality (Hauck and Stanforth, 2007). As

a result, the correlation of price and quality plays an important role in consumer

decision making, affecting judgements of perceived quality, and influencing

perceived value and purchase intention (Zhou et al., 2002). Considering all the above,

the study proposes that the relationship between a product’s price and quality (the

price-quality schema) also exists with regard to price and quality risks. Thus, the

following hypothesis has been formulated:

H7: Price and quality risks are interrelated and positively influence one another

2.3. Web vendor risks

The online purchasing process turns consumers into both product buyers and users of

web-based technologies (Wu, 2013). When using the Internet to purchase products,

the fundamental risks are associated with privacy issues (Pantano et al., 2013; 6,

2002), the degree to which consumers perceive that using the online environment will

be secure (Taylor and Strutton, 2010), the inability of buyers to directly interact with

the seller, the difficulty of navigation (Forsythe et al., 2006) the time spent searching

for information, and uncertainty about the after sales service warrantee compared with

more traditional ways of shopping (Hong and Yi, 2012). Especially in products that

are characterised by intangibility (such as in tourism) the perceived risks increase

considerably (Laroche et al., 2004), thus services are thought to be riskier to purchase

than goods (Mitchell and Greatorex, 1993). The provided product information is

important for the minimisation of perceived purchasing risks, thus potential buyers

tend to collect and consider more information about the sources’ trustworthiness when

relatively high product risks are involved (Wang and Chang, 2013). Moreover, the
consumers’ level of trust in the online platform, and in its safety and security, helps to

construct a psychological belief in the e-vendor which ultimately determines the

likelihood of a sale being made (Hong and Cho, 2011). Taking into consideration

these issues, the research has formulated the following hypotheses:

H8: Web-vendor quality risks have a negative impact upon web-vendor consumer

trust

H9: Web-vendor security risks have a negative impact upon web-vendor consumer

trust

Risk and quality issues are also related to the website vendor themselves (Ahn et al.,

2004). The online consumers are likely to purchase from e-vendors that they can trust

and recognise the quality of the provided products and services (Jiang et al., 2008).

As suggested by Golmohammadi et al. (2012), website vendors need to promote

client trust in their provided service quality, in an effort to reduce the perceived risk as

this is a vital antecedent for consumer online purchase intention. Thus, e-retailers

need to develop mechanisms able to ensure customer privacy and secure money

transfer along with the provision of high quality services (Kerkhof and Van Noort,

2010). These relationships were expressed in the following hypothesis:

H10: Web-vendor quality and security risks are interrelated and positively influence

one another
Perceived risk is very important for e-consumers (Doolin et al., 2005) since it is

considered as a product-specific variable and varies in terms of product ambiguity and

price (Finch, 2007). Kothandaraman and Wilson (2001) suggest that the ideal

purchase is the one that has a highly beneficial impact for the consumer, and offers

low risk. As indicated by Bhatnagar and Ghose (2004), online shopping magnifies

perceived risks, it increases the influence of positive and negative aspects dealing

with Internet purchase, and heavily impacts on consumers’ final decision. Moreover,

all factors that e-retailers use for lowering risks, influence consumer’s purchasing

behaviour, since different types of risks interact with one another (Crespo et al., 2009;

Lin et al., 2010). In addition, the way products are handled by e-retailers and their

vendors significantly influence the risk perceptions of customers (Ramanathan, 2011).

Thus, product and web-vendor perceived risks are interrelated, whilst Woodwall

(2003) identifies risk as a determinant for the perception of values and identification

of benefits in purchasing intentions. From a managerial perspective, the

comprehension of e-consumers’ risks and the way they react to risks can assist e-

retailers to optimise their business strategies and prospects (Comegys et al., 2006).

These findings have led to the formulation of the following hypotheses:

H11: Product price risks and web-vendor quality risks are interrelated and positively

influence one another

H12: Product price risks and web-vendor security risks are interrelated and positively

influence one another

H13: Product and web-vendor quality risks are interrelated and positively influence

one another

H14: Product quality risks and web-vendor security risks are interrelated and

positively influence one another

2.4. Consumer trust

Aspects of trust have been examined in numerous studies in many different fields,

such as economics, management, technology, social and institutional contexts,

consumer behaviour and psychology (Kim et al., 2008). Trust is based on the buyer’s

expectations that the seller will not have an opportunistic attitude and take advantage

of the situation, but will behave in a dependable, ethical and socially appropriate

manner, fulfilling his commitments despite the buyer’s vulnerability and dependence

(Gefen et al., 2003). Thus, the consumers’ perspectives on trustworthiness are likely

to determine the final purchasing decision between a buyer and a seller (Gupta et al.,

2009). According to Li et al. (2014, trust is even more important for online than for

offline retailers, since consumers perceive more risk in e-commerce due to their

inability to visit a physical store and examine the product they are interested in buying.

It plays a crucial role in determining online purchasing intentions (Hong and Cho,

2011) and shopping decisions (Buttner and Goritz, 2008). Trust is also the key-point

for the development of customer loyalty and the establishment of strong and long-

lasting relations between buyers and sellers (Santos and Fernandes, 2008). In contrast,

a lack of trust is the greatest barrier to consumers making online transactions (Urban

et al., 2009). When deception or negative purchasing experiences occur, buyers

generate negative attitudes (Gao and Bai, 2014), they no longer trust the seller, and

they are likely to turn to alternatives for the fulfilment of their needs and desires (Lee,

2014).

Online retailers place considerable emphasis on consumer trust, since they are more

reluctant to purchase the products in which they are interested (Park et al., 2012).

Examining the relevance of trust and purchasing intention, Komiak and Bembasat

(2006) have concluded that cognitive trust (which focuses on consumers’ beliefs

based on rational expectations of online retailers’ attributes) impacts on emotional

trust (which addresses consumer attitudes and emotional feelings), which further

impacts upon purchase intention. Moreover, the trust level of buyers exposed to

inconsistent product information and revisions significantly influences their purchase

intention (Zhang et al., 2014). As a result, the critical role of trust in the determination

of consumers’ purchasing intentions is affected by satisfaction with both products and

online stores (Wu, 2013). Thus, if sellers want consumers to buy their products

(purchase decision and money transfer), they need to pass the threshold for

trustworthy behaviour (Bente et al., 2012). All of the above led to the formulation of

the following hypotheses:

H15: The consumer’s trust in products has a positive impact on the intention to

purchase

H16: The consumer’s trust in web-vendors has a positive impact on the intention to

purchase
2.5. Intention to purchase

In e-retailing, the importance of trust in consumer purchasing decisions is of

significant interest to retailers (Park et al., 2012), since it is considered to be the most

important factor influencing buying behaviour (Benedicktus et al., 2010; Kim et al.,

2012). Understanding the purchase intention of consumers is crucial because their

final buying behaviour can be predicted from their intention (Bai et al., 2008).

Consumers decide whether they intend to proceed with a purchase based upon the

information available to them (Kim et al., 2008). In addition, when risk is involved,

the extent of the trust consumers place in the sources of information and the provided

recommendations and reviews influences their final purchasing decision (Wang and

Chang, 2013), since a reduction in performance and financial risks leads to an

increased possibility of a potential purchase (Suwelack et al., 2011). Moreover, the

quality and quantity of the provided information positively affects consumers’

purchase intention (Park et al., 2007). Currently, e-retailers focus not only on

persuading consumers to use vendor websites that sell their products, but also on

motivating consumers to make repeat purchases through these channels (Chiu et al.,

2012). Thus, it is important to further examine online consumers’ perspectives with

regard to products offered and to web-vendors, also connecting them with the trust

factors affecting the intention to buy online.

3. The proposed model

The model is a combination of the Theory of Planned Behaviour (TPB), which is an

extension of the theory of reasoned action (Ajzen and Fishbein, 1980), and the

Perceived Risk Theory (PRT), based on the undesirable impacts of uncertainty in the

process of making a purchasing decision (Bauer, 1960).

According to TPB, individuals intend to perform a given behaviour (in our case the

consumer’s intention to purchase), whilst the generated assumptions from these

intentions aim to identify and explain the motivational factors that influence this

behaviour (Ajzen, 1991). The ability of TPB to predict human behaviour has led to its

application in several research fields, including online retailing (Picazo-Vela et al.,

2013), since it is considered to be one of the most widely used models for the

explanation and prediction of individual behavioural intention and acceptance of

Information Technology (Hsu et al., 2006). TPB has also been used to predict the

intention of consumers to purchase tourism products, and foresee the impact of

several factors such as risk and uncertainty in travel decision making (Quinta et al.,

2010).

In PRT the potential risks associated with the purchasing process influence

consumers’ decisions (Yu et al., 2012). Cunningham (1967) suggested that the extent

of a perceived risk is dependent on the size of the potential loss. According to Bauer

(1960), in order for consumers to reduce uncertainty when information is limited and

when they do not expect potentially favourable consequences during the shopping

process, they develop or adopt strategies for the reduction of risk. Thus, consumers

adopt information handling as a strategy for risk reduction; either they seek new

information, or they refer to and evaluate already existing information (Cox, 1967). In

terms of online shopping, the consumers “seek and assess information regarding

product performance through virtual product experience in order to reduce risk and

increase certainty that the consequence of product performance will be favourable”

(Yu et al., 2012, p.253). In PRT, the components of perceived risk are finance (price),
product performance (quality), physical, privacy and time loss related (Kaplan et al.,

1974), but online transactions do not incur any physical risk, such as threat to human

life (Lee 2009). Thus in this study PRT has focused on the remaining four perceived

risks, divided between product (financial) and web-vendor (privacy; time loss) risks,

whilst the performance aspects have been examined for both products and e-channels.

Figure 1 illustrates the model of the study, which has its theoretical basis in TPB and

PRT and builds on previous research by Ahn et al. (2004), Chikweche and Fletcher

(2010), Gefen et al. (2003), Hong and Yi (2012), Kim et al. (2008), Sanchez et al.

(2006), and Sparks and Browning (2011). It suggests that the online intention to

purchase (with special reference to tourism products) is influenced by the extent of

product and web-vendor trust, whilst trust constructs are formulated from the product

(in terms of price and quality) and web-vendor (in terms of quality and security)

perceived risks, and the interaction amongst them. Finally it proposes that marketing

strategies, focused on both products and e-vendors, can directly influence the extent

of perceived risks.

Please input Figure 1

4. Method

4.1 Participants

The research focused on holidaymakers returning to Manchester international airport

who had used the Internet in order to book a part (i.e. travel, accommodation,

destination tourism activities) or the whole spectrum of their holidays. The research

was conducted during June and July 2014. This study used structured personal
interviews with structured questionnaires as the most appropriate method of obtaining

the primary data. Personal interviews were the best method of achieving the study’s

objectives since they are the most versatile and productive method of communication

(Pappas, 2014). They facilitate spontaneity and also provide the potential to guide the

discussion back to the outlined topic when discussions are unfruitful (Sekaran and

Bougie, 2009). The participants’ selection was based on an exclusion question at the

beginning of the interview which asked whether they had used online purchasing of

tourist products for their current vacations. Although the proportion of missing data

was low, listwise deletion (the entire record is excluded from the analysis) was used

because this is the least problematic method of handling missing data (Allison, 2001).

4.2. Sample determination and collection

Appropriate representation was a fundamental criterion in determining the sample

size. According to Akis et al., (1996), when there are unknown population

proportions, the researcher should choose a conservative response format of 50 / 50

(meaning the assumption that 50 per cent of the respondents have negative

perceptions, and 50 per cent have not) to determine the sample size. The same study

indicates that the maximum acceptable sampling error should not exceed five per

cent. As a result, a confidence level of at least 95 per cent and a five per cent sampling

error were selected. Moreover, for researches with a minimum of 95 per cent

confidence level (and five per cent sampling error) the t-table gives as cumulative

probability (Z) 1.96 (Sekaran and Bougie, 2009). Following Akis et al. (1996) sample

determination formula, the sample size was:

 Z 2 (hypothesis ) 1.96 2 (0.5)(0.5)
N= ⇒ N = ⇒ N = 384.16 Rounded to 400
S2 (0.5) 2

The calculation of the sampling size is independent of the total population size, hence

the sampling size determines the error (Aaker and Day, 1990). Participants were

approached in the airport’s train station (400 people), bus station (400 people), and

car parking facilities (400 people). Of the 1,200 holidaymakers asked, 735 completed

the questionnaire (response rate: 61.25 per cent). The overall statistical error for the

sample population was 3.6 per cent.

4.3. Measures

The questionnaire was based on prior research, and consisted of 41 Likert Scale (1

strongly agree/7 strongly disagree) statements, plus one exclusion question

concerning online purchasing of tourist products. The reliability and validity of this

selection rationale is supported by studies such as Kyle, Graefe, Manning and Bacon

(2003) and Gross and Brown (2008). The statements were selected from seven

different studies. These studies were those of: Chikweche and Fletcher (2010) for the

statements evaluating the product and web-vendor marketing strategies, Sanchez et al.

(2006) for the statements dealing with product risks in price and quality, Ahn et al.

(2004) and Hong and Yi (2012) for the statements focusing on web-vendor quality

risks, Hong and Yi (2012), for the statements examining the web-vendor security

risks, Sparks and Browning (2011) for the statements focusing on product consumer

trust, Gefen et al., (2003) for the statements addressing web-vendor consumer trust,

and Kim et al., (2008) for the intention to purchase statements.

4.4. Data analysis

The collected data were analysed using descriptive statistics (means, standard

deviation, kurtosis, skewness), factor analysis, and regression. The research and

components’ validity and reliability were examined using KMO-Bartlett, loadings and

Cronbach A, whilst a Structural Equation Model (SEM) was also implemented. The

findings were significant at the 0.05 level of confidence.

4.5. SEM analysis

Structural Equation Modelling (SEM) using MPlus was employed due to the

multivariate nature of the proposed model and the examination of the relationships

between the model constructs, since the main advantage of SEM “is its capacity to

estimate and test the relationships among constructs” (Weston and Gore 2006, p.723).

As Gross and Brown (2008) suggest, the multivariate statistical analysis of SEM is

capable of measuring the concepts and the paths of hypothesised relationships

between concepts. According to Wang and Wang (2012), when using MPlus it is best

to measure the grouping variables as continuous, and also to measure those assessed

through a five-point (or more) Likert Scale in this way, although they are in fact

ordered categorical measures. Thus, the study measured the variables as continuous.

As suggested by Anderson and Gerbing (1992) a two-step approach was adopted. The

first part dealt with the assessment of the factor structure of each of the measurement

models using Confirmatory Factor Analysis (CFA). The examined constructs for the

determination of model fit were: product marketing strategies, web-vendor marketing

strategies, product price risks, product quality risks, web-vendor quality risks, web-

vendor security risks, product consumer trust, web-vendor consumer trust, and

intention to purchase. Then, the complete structural model was examined for the
identification of causal relationships among the constructs, and the determination of

structural model fit.

5. Results

The descriptive statistics (Table 1) reveal that the most important aspect for

consumers, with regard to product marketing activities, is the branding of the actual

product (PMA3: 2.18), whilst direct marketing has a considerably higher influence on

purchasing decisions (PMA1: 2.29) than ‘above the line’ promotions (PMA2: 3.02).

The findings are similar for web-vendor marketing activities in terms of branding

(WMA3: 1.78), and promotional activities (WMA1: 2.05; WMA2: 2.72). Moreover,

the results have identified that the most important concerns for consumers are to

purchase a tourism product at a reasonable price (PPR2: 1.42) which is also of

sufficient quality when compared with other similar products (PQR3: 1.51). On the

other hand, the main determinants for selecting an e-channel are the extent to which

the web-vendor reduces consumers’ uncertainty by creating a feeling of trust (WQR4:

1.52), keeps its promises (WQR3: 1.70), and understands its users’ specific needs

(WQR5: 169). In terms of security, consumers’ main fear seems to be potential online

fraud (WSR5: 1.88). The significance of trust was also pinpointed by the results,

whilst the product orientation (PCT1-PCT4) seems to be more important for the final

purchase than web-vendor trust (WCT1-WCT4). Finally, the participants agreed that

they would continue to buy products online (IP1: 2.24; IP3: 2.07), and also suggest

this shopping pattern to their friends (IP2: 1.90).

Please Input Table 1

5.1. Model fit

In order to ensure that the data support the relationships amongst the observed

variables and their respective factors, the model had to examine the individual factors.

The most common measure of SEM fit is the probability of the χ2 statistic (Martens,

2005), which should be non-significant in a good fitting model (Hallak et al., 2012).

Since the research sample was big (N=735), the ratio of χ2 divided by the degrees of

freedom (χ2/df) was considered a better estimate of goodness-of-fit than χ2 (Chen and

Chai, 2007). According to Schermelleh-Engel et al. (2003), a good fit is provided if

0≤χ2/df≤2. Other model fit indices were also used in the analysis. These were:

 The Comparative Fit Index (CFI), which specifies no relationships among

variables, and indicates a better fit when it is closer to 1.0 (Weston and Gore,

2006).

 The Root Mean Square Error of Approximation (RMSEA), where a value

of .05 or less reflects a model of close fit (Browne and Cudeck, 1993).

 The Standardised Root-Mean-Square Residual (SRMR), which is the square

root of the discrepancy between the sample covariance matrix and the model

covariance matrix, and should be less than .08 (Hu and Bentler, 1999).

As recommended by Kline (2010) amongst several other indices, these four (χ2, CFI,

RMSEA, and SRMR) are the most appropriate for the examination and evaluation of

model fit. The CFA results have shown that the χ2 model value was 312.844 with 189

degrees of freedom (p<.01) and the χ2/df ratio was 1.655, providing a good fit. The

remaining model fit indicators were CFI= .922, RMSEA= .041, and SRMR= .075

(p<.01), indicating a model of good fit.

Factor analysis was used in an effort to focus on the important components of the

research (Table 2). Thus, for higher coefficients, absolute values of less than .4 were

suppressed. The correlation matrix revealed numbers larger than .4 in 37 out of 41

statements, and four of them did not score over .4, which is the minimum acceptable

value (Norman and Streiner, 2008). The KMO of Sampling Adequacy was 0.892

(higher than the minimum requested 0.6 for further analysis), whilst statistical

significance also existed (p<.01). In order to examine whether several items that

propose to measure the same general construct produce similar scores (internal

consistency), the research also made an analysis using Cronbach’s Alpha, where the

overall reliability was .828 and all variables scored over 8 (minimum value 7;

Nunnally, 1978).

Please input Table 2

The research model explains the endogenous variables of the study (Figure 2):

product price risks (R2=.316), product quality risks (R2=.432), web-vendor quality

risks (R2=.335), web-vendor security risks (R2=.453), product consumer trust

(R2=.487), web-vendor consumer trust (R2=.420), and intention to purchase (R2=.558).

For the correlated constructs, discriminant validity was also employed. The research

revealed ten item pairings. The average inter-item correlation was .40, whilst the

individual correlation rating was from .32 to .50. For the examined factors of Product

Price Risks (PPR), Product Quality Risks (PQR), Web-vendor Quality Risks (WQR),

and Web-vendor Security Risks (WSR) the average inter-item correlation results are

the following: PPR–PPR= .48; PQR–PQR=.50; WQR–WQR=.44; WSR–WSR= 46;

PPR–PQR= 37; PPR–WQR= 36; PPR–WSR= 33; PQR–WSR=40; PQR–WQR= 32;

and WSR–WQR=34.

The calculation of discriminant validity revealed that:

PPR − PQR 0.37

= = 0.75
PPR − PPR × PQR − PQR 0.48 × 0.50

PPR − WQR 0.36

= = 0.78
PPR − PPR × WQR − WQR 0.48 × 0.44

PPR − WSR 0.33

= = 0.70
PPR − PPR × WSR − WSR 0.48 × 0.46

PQR − WSR 0.40

= = 0.83
PQR − PQR × WSR − WSR 0.50 × 0.46

PQR − WQR 0.32

= = 0.68
PQR − PQR × WQR − WQR 0.50 × 0.44

WSR − WQR 0.34

= = 0.76
WSR − WSR × WQR − WQR 0.46 × 0.44

According to Pappas (2014), if the discriminant validity is less than .85 the examined

constructs do not overlap, meaning that they measure different things. The results

indicate that discriminant validity exists in all components. Considering all the above,

this model is able to evaluate the importance of the examined factors.

Please input Figure 2

5.2. Hypothesis testing

As shown in Figure 2 most hypotheses have been confirmed. More specifically,

product marketing strategies have a negative impact upon product price risks (H1:

β=.235; p<.01) and product quality risks (H2: β=.203; p<.01). In parallel, web-vendor

marketing activities also negatively affect perceptions of web-vendor risk associated

with quality (H3: β=.258; p<.01) and security (H4: β=.197; p<.01). Product price risks

have the only positive interrelationship with product quality risks (H7: β=.287; p<.05),

whilst they negatively influence product consumer trust (H5: β=.247; p<.05). Product

quality risks have two positive interrelationships, with web-vendor’s quality (H13:

β=.325; p<.01) and security risks (H14: β=.178; p<.05), whilst they have a negative

impact upon product consumer trust (H6: β=.352; p<.01). Web-vendor quality risks

positively interrelate with web-vendor security risks (H10: β=.314; p<.05), and have a

negative influence on web-vendor consumer trust (H8: β=.278; p<.01). The negative

impact of web-vendor security risks on web-vendor consumer trust was also

confirmed (H9: β=.345; p<.01). Finally, the intention to purchase is positively

influenced by both product (H15: β=.357; p<.01) and web-vendor (H16: β=.311;

p<.01) consumer trust.

Two hypotheses were not confirmed. These dealt with the construct of product price

risk and its interrelationship with web-vendor risk in terms of quality (H11: β=.189;

p>.05) and security (H12: β=.226; p>.05).

6. Discussion

6.1. Theoretical issues

The study contributes to the theoretical domain in two different ways. The first

focuses on the impact of marketing strategies upon perceived risks. To begin with, the

research establishes the significant influence of marketing upon the formulation and

extent of product (H1; H2) and web-vendor (H3; H4) perceived risks. Thus, it

provides evidence that marketing can contribute to a reduction in the financial,

security and performance risks involved in Internet transactions, as suggested by Lee

(2009). In addition, marketing strategies appear to mostly influence product price

(H1) and web-vendor quality (H3) risks. Moreover, the impact on consumers of direct

marketing activities focusing on both products (PMA1) and web-vendors (WMA1) is

considerably higher than that for ‘above the line’ (PMA2; WMA2) promotional

initiatives. These findings confirm the results of previous studies such as Brown and

Reingen (1987), and Chikweche and Fletcher (2010). Still, with regard to the

examined activities, the brand names of products (PMA3) and e-channel branding

(WMA3) seem to have the greatest influence. Even if the importance of branding has

been highlighted previously (Huang et al., 2004), it seems that in online retailing

branding associations are the main marketing determinants for the minimisation of

perceived risks.

The second contribution concerns the examination of the interrelationship between

perceived risks. As the findings indicate, not only do interrelationships exist between

the risks within groups of products (H7) and web-vendors (H10), but product and

web-vendor risks also positively influence one another (H13; H14). Furthermore, H7

extends the price-quality schema, as expressed by Lichtenstein (1993), from product

orientation to risks. In contrast, product price risks have no interrelationship with

web-vendor risks (H11; H12), whilst product quality risks interrelate with both web-

vendor constructs, underlining the significance of quality aspects in online

transactions. The findings also confirm the existence of perceived risk components

(financial, performance privacy and time loss), as presented by Kaplan et al. (1974)

and Lee (2009). Amongst product related risks, the most important appears to be the

financial risk associated with reasonable price (PPR2), followed by the performance

risks of quality comparison with similar products (PQR3) and the expected

performance result (PQR2). In terms of web-vendors, the quality aspects of

confidence through uncertainty reduction (WQR4), the coverage of users’ specific

needs (WQR5) and the need for e-channels to keep their promises (WQR3) have been

highlighted as the most important. Concerning security, the potential for online fraud

(WSR5) was the most important risk according to the responses of the examined

population. These findings are in accordance with the results from the studies of Hong

and Cho (2011), Taylor and Strutton (2010), and Wang and Chang (2013), which also

present the importance of web-vendors’ trustworthiness and consumers’ concern for

potential fraud during online transactions.

From a managerial perspective the first contribution of the study concerns the

influence of perceived risks on consumer trust. Even if the impact of risks upon trust

has been repeatedly discussed in the literature (Hong and Cho, 2011; Dowling, 1999;

Laroche et al., 2004; Kiang et al., 2011), this study reveals that product (H5; H6) and

web-vendor oriented risks (H8; H9) influence trust (and ultimately purchasing

decisions) to almost the same extent. More specifically, amongst the product risks the

quality construct seems to have a higher impact (H6) upon product consumer trust.
However, for risks associated with the web-vendor, the importance of the security

construct (H9) overweighs the quality aspects (H8) in terms of the influence on web-

vendor consumer trust.

Finally, the study contributes to the understanding of product and web-vendor

consumers’ trust with regard to the formulation of purchasing intention. As the results

indicate, product (H15) and web-vendor (H16) trust almost equally influence the

consumers’ intention to purchase. The most important aspect for holidaymakers when

selecting tourist products/packages is their quality (PCT4) and the impression that the

web-vendor cares about its users (WCT3). Thus, as also stated by Gefen et al. (2003),

the findings confirm that an opportunistic attitude on the part of e-retailers will result

in a decrease in consumer trust with a parallel reduction in willingness to purchase,

and finally a considerable loss of clients. Conversely, if buyers are satisfied with their

online purchase, they are likely to suggest this mode of shopping to their friends (IP2).

This is the pathway to further e-retailing development and the strengthening of online

shopping.

6.2. Managerial implications

The study identifies a number of managerial implications which could help e-retailers

with the development of further online sales and reduction of the risks perceived by

consumers. The findings suggest that online retailers should mainly focus their

marketing strategies on the strengthening of the brand image of both products and

web-vendors. The development of trustworthiness in online transactions is

considerably affected by branding aspects, as they seem to be the main factors

involved in minimising the perceived risks involved with both products and web-
vendors. As suggested by Li et al. (2014), this is due to the fact that trust is more

important for online than for offline retailers, because of the higher perceived risk in

using e-commerce. This risk perspective is even higher for services such as tourism,

due to their intangible character. Moreover, retailers should mainly (but not only)

focus on direct marketing campaigns since their influential impact upon risk

formulation is higher in an online environment. The provision of detailed and accurate

information for the products of interest combined with reasonable prices and the

consumer’s expectation of a beneficial purchase can further boost Internet sales.

The interrelationship of risk aspects and their influence on consumers’ trust

formulation is one more issue e-retailers need to focus upon. As the results indicate,

consumer trust is equally important for products and e-channels, and is similarly

affected by perceived risks. Furthermore, the interrelated positive influence of risk is

shown to have an effect in the whole spectrum of risk and finally the formulation of

trust constructs. Thus, companies that sell their products on the Internet need to

understand that trustworthy web-vendors can increase the perceived quality of the

products they sell. Accordingly, good quality products are likely to assist in online

uncertainty reduction, increase trust in the web-vendor that sells these products, and

strengthen the feeling that e-channels care for their users and understand their specific

needs.

7. Conclusion

The study has examined the influence of marketing on the development of perceived

risks in online buying behaviour and the formulation of consumers’ trust. By using

TPB and PRT it has presented the interrelationships between risk factors and the
creation of Internet purchasing intentions, with a special focus on tourist products. It

has also evaluated the impact of marketing strategies upon the minimisation of

perceived risks associated with both products and e-vendors. Moreover, it has

illustrated the formulation of product and e-channel related consumer trust, and the

extent to which it is influenced by perceived financial, performance, security and time

loss risks. This study has contributed further understanding of the way in which online

risks can be influenced by marketing strategies, and ultimately have an impact upon

purchasing intentions, especially in tourism where consumers perceive the products to

be high risk.

Despite the research contribution, the limitations of the study need to be highlighted.

First, the examination of different e-channels, product brand names or destination

images can produce different outcomes. Thus, if this study is repeated for specific

website vendors or tourism products and destinations the research implementation

should be made with caution. Second, further research into e-retailers and different

stakeholder groups (i.e. social media and online purchasing channel administrators,

tourism and hospitality enterprises selling their products both online and in high

streets, tour operators, etc.) may produce different outcomes. Thus, the interpretation

of findings should be made carefully. Finally the inclusion of respondents’ personal

characteristics, such as frequency of, and familiarity with, online purchasing or

disposable income for tourism activities, could further contribute to the evaluation of

e-buying intentions and perception variations. Such examination could provide useful

findings for the formulation of e-buyers’ perspectives and purchasing behaviour.

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Figure 1: The proposed model

Product
Price Risks
H5

Product H1 Product
Marketing H7 Consumer
Strategies H2 Trust

H11 Product H6
Quality
Risks
H15
Intention to
H12 H13 Purchase

H16
Web-Vendor
Quality
H14 Risks H8

Web-Vendor H3 Web-Vendor
Marketing H10 Consumer
Strategies H4 Trust

Web-Vendor H9
Security
Risks
Table 1: Descriptive statistics
Statement Means Std. Dev. Kurtosis Skewness
Product Marketing Activities
PMA1 Direct marketing activities (i.e. direct mail and e-mails) influence my online purchasing 2.29 .563 .835 .734
decisions
PMA2 The ‘above the line’ promotional activities (i.e. TV and radio advertisements) influence 3.02 .573 .945 .780
my online purchasing decisions
PMA3 The tourism product’s branding influences my online purchasing decisions 2.18 .437 .831 -.915
PMA4 The online promotions influence my decision to select the tourist product/package I 2.35 .254 .-635 .830
intend to buy
PMA5 The offline promotions influence my decision to select the tourist product/package I 2.97 .659 -.893 .911
intend to buy
Web-Vendor Marketing Activities
WMA1 Direct marketing activities (i.e. direct mail and e-mails) by web-vendors influence the e- 2.05 .580 1.205 -.837
channel I select when buying tourism products
WMA2 The ‘above the line’ promotional activities (i.e. TV and radio advertisements) by web 2.72 .681 -.720 .742
vendors influence the e-channel I select when buying tourism products
WMA3 The branding of web-vendors influences the e-channel I select when buying tourism 1.78 .366 .832 .789
products
WMA4 The online promotions influence my decision to select a particular e-channel when 2.15 .482 1.089 .866
buying a tourist product/package
WMA5 The offline promotions influence my decision to select a particular e-channel when 2.63 .395 1.132 -1.147
buying a tourist product/package
Product Price Risks
PPR1 I think about the risk of not having made a good purchase bearing in mind the price I pay 1.75 .705 1.251 .985
PPR2 The tourist product/package I purchase should be reasonably priced 1.42 .823 -.795 -.880
PPR3 The price is the main criterion for my purchasing decision 2.43 .634 -.980 1.304
Product Quality Risks
PQR1 When buying a tourist product/package I consider the potential risks in the way the 1.70 .492 .789 .973
 product/package is organised
PQR2 When buying a tourist product/package I consider the potential risk that I will not receive 1.55 .420 .821 -.765
what I expected
PQR3 When buying a tourist product/package I consider its quality compared with other 1.51 .389 .969 -1.077
relevant tourist products/packages
Web-Vendor Quality Risks
WQR1 It is important that the Website vendor provides detailed information 1.82 .537 .858 .917
WQR2 It is important that the Website vendor provides accurate information 1.97 .599 -.927 .780
WQR3 It is important that the Website vendor can be depended upon to provide whatever is 1.70 .846 -.658 .751
promised
WQR4 It is important that the Website vendor creates a feeling of confidence in users through 1.52 .735 1.074 .586
the reduction of uncertainty (i.e. joint problem-solving)
WQR5 It is important that the Website vendor understands and adapts to the user’s specific 1.69 .623 1.125 -746
needs
WQR6 It is important that the website vendor deals with high quality products 2.46 .410 .880 .978
WQR7 It is important that the Website vendor deals with various tourism products 2.88 .455 .832 .753
WQR8 Purchasing online would involve a trivial payment procedure when compared with more 2.21 .361 .742 .758
traditional ways of shopping
WQR9 Purchasing online would involve taking more time to seek out information when 5.28 .450 .841 .532
compared with more traditional ways of shopping
Web-Vendor Security Risks
WSR1 Purchasing online involves the risk of credit loss when compared with more traditional 2.55 .782 .835 .864
ways of shopping
WSR2 Purchasing online involves the risk of loss of private information when compared with 4.06 .698 .815 .689
more traditional ways of shopping
WSR3 Purchasing online involves after sales service warrantee risks when compared with more 3.87 .438 -.934 .901
traditional ways of shopping
WSR4 In general, providing credit card information through online shopping is riskier than 4.85 .482 -734 1.239
providing it over the phone to an offline vendor
WSR5 Purchasing online involves the risk of fraudulent behaviour on the part of the website 1.88 .711 .910 1.014
 owner(s)
Product Consumer Trust
PCT1 The tourist product/package I purchased is trustworthy 1.85 .573 1.235 .853
PCT2 The tourist product/package I purchased is reliable 1.69 .824 -.845 .963
PCT3 The tourist product/package I purchased fills me with confidence 1.65 .466 -.773 .828
PCT4 The tourist product/package I purchased gives me the impression that it is of good 1.57 .553 -.695 -.934
quality
Web-Vendor Consumer Trust
WCT1 Shopping online is a trustworthy method of shopping 2.95 .688 .792 .813
WCT2 The Website vendor I use gives the impression that they are honest 2.87 .548 .897 -.836
WCT3 The Website vendor I use gives the impression that they care for their users 2.41 .492 .811 -.955
WCT4 The Website vendor I use gives the impression that they have the ability to fulfil my 2.56 .776 .798 .663
needs
Intention to Purchase
IP1 I am likely to purchase tourism products online 2.24 .512 1.290 .907
IP2 I am likely to recommend online shopping to my friends 1.90 .587 .933 1.070
IP3 I am likely to make another online purchase if the products I buy prove to be useful 2.07 .474 .967 1.003
Table 2. Cronbach’s Alpha and loadings produced by factor analysis

Statement Cronbach’s Product W-vendor Product Product W-vendor W-vendor Product W-vendor Intention to
Alpha Marketing Marketing Price Risks Quality Quality Security Consumer Consumer Purchase
Activities Activities Risks Risks Risks Trust Trust
PMA1 .826 .735
PMA2 .797
PMA3 .612
PMA4 .805
PMA5 .747
WMA1 .829 .642
WMA2 .587
WMA3 .650
WMA4 .698
WMA5 .534
PPR1 .820 .723
PPR2 .795
PPR3 .742
PQR1 .831 .839
PQR2 .904
PQR3 .756
WQR1 .838 Eliminated from factor analysis based on a low commonality
.344
WQR2 .721
WQR3 .623
WQR4 .802
WQR5 .556
WQR6 .728
WQR7 .670
WQR8 Eliminated from factor analysis based on a low commonality
 .281
WQR9 .644
WSR1 .817 .478
WSR2 .507
WSR3 Eliminated from factor analysis based on a low commonality
.315
WSR4 .579
WSR5 .482
PCT1 .824 .611
PCT2 .745
PCT3 .798
PCT4 Eliminated from factor analysis based on a low commonality
.267
WCT1 .835 .877
WCT2 .820
WCT3 .913
WCT4 .842
IP1 .817 .851
IP2 .866
IP3 .847
Total Rotation Sums of 4.204 4.764 5.017 6.563 5.356 6.248 5.285 6.821 6.967
Squared Loadings
Percent of Total Variance 11.863 10.258 12.637 16.290 12.763 15.364 14.963 16.750 15.142
Explained
Figure 2: Risk and marketing influences in online buying behaviour

R2=.316

Product
Price Risks
.247* R2=.487

Product .235** Product

Marketing .287* Consumer
Strategies .203** Trust

Product .352**
Quality
Risks R2=.558
.357**
R2=.432 Intention to
.325** Purchase
2
R =.335

.311**
Web-Vendor
.178* Quality
Risks .278**

Web-Vendor .258** Web-Vendor

Marketing .314* Consumer
Strategies .197** Trust

Web-Vendor .345** R2=.420

Security
Risks

R2=.453

*Coefficient is significant at 0.05 level

** Coefficient is significant at 0.01 level