Online privacy concerns and consumer reactions: insights for future strategies
Authors: Kansal Purva 
Published: August 2014

Purpose

– The present study aims to identify and study the online privacy concerns, its explanatory variables and their affect on reactions and online purchasing behavior of Indian consumers. Globalization means that companies are setting manufacturing units where their cost dynamics are most attractive and then servicing the customers in different markets. Therefore, today, most of the globalized firms are using technology to overcome physical barriers with the customer. The value chains are being reorganized to come up with innovative strategies for sales, delivery and service channels. These strategies use Internet as a competitive tool, thereby providing marketers with a completely new landscape to work with. This channel means that now even the tangibles (products) are being sold on the basis of intangibles (services). In this landscape, the success of an online business depends on its capability to think globally and act locally. Sensitivity displayed by a company to effects of cultural nuances on a consumer’s psychological constructs will determine the success of a company and its strategy. It is in this backdrop that the current study was undertaken.

Design/methodology/approach

– To establish a relationship of the consumer privacy concerns and consumers’ reactions and their online purchase behavior, data were collected on the basis of a self-administered structured questionnaire. Data were collected from 150 respondents. Confirmatory factor analysis in LISREL (8.70) was done to check the validity of the scale. Incremental fit indices and parsimonious fit indices were used to interpret whether the model fit the data. Further, data were analyzed using factor analysis, correlation and chi-square tests.

Findings

– The study found several significant correlations between consumer’s online privacy and their behavior. The study made attempt to study only linkages and not a causal relationship. This study found that there was a correlation between online privacy concerns and consumer behavior. Indian consumers opted to voice and complain about privacy concerns, and hence, companies need to invest in recovery strategies. Furthermore, Indian consumers exhibited more of a refrained behavior rather than hedonic purchase behavior. However, refrained behavior was a first step toward the latter. To promote refrained behavior, marketers need to work with a model which provides Indian consumers with an assurance of procedural fairness and fair information practices. These companies need to invest in software, rewards, detailed privacy notices and tangibles to motivate customers into transacting online. Armed with this information a marketer can also invest into the right kind of privacy and security tools.

Research limitations/implications

– Due to the limited sample size, the results of the study can be generalized to a limited extent.

Practical implications

– The results would help online marketers maneuver the target consumer’s behavior in the desired direction. The results would help companies design and invest in the right kind of privacy and security tools, for the target segments matching the sample.

Originality/value

– The manuscript is based on a unique data set collected for this study. The references have been cited as per American Psychological Association (APA) rules. The work is original.