• Journal of Global Scholars of Marketing Science
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• v.18 no.2
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• pp.19-45
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• 2008

This study is to empirically examine the primary dimensions of visual merchandising (VMD) of internet shopping mall, namely store design, merchandise, and merchandising cues, to be a attractive virtual store to the shoppers. The authors reviewed the literature related to the major components of VMD from the perspective of the AIDA model, which has been mainly applied to the offline store settings. The major purposes of the study are as follows; first, tries to derive the variables related with the components of visual merchandising through reviewing the existing literatures, establish the hypotheses, and test it empirically. Second, examines the relationships between the components of VMD and the attitude toward the VMD, however, putting more emphasis on finding out the component structure of the VMD. VMD needs to be examined with the perspective that an online shopping mall is a virtual self-service or clerkless store, which could reduce the number of employees, help the shoppers search, evaluate and purchase for themselves, and to be explored in terms of the in-store persuasion processes of customers. This study reviewed the literatures related to store design, merchandise, and merchandising cues which might be relevant to the store, product, and promotion respectively. VMD is a total communication tool, and AIDA model could explain the in-store consumer behavior of online shopping. Store design has to do with triggering a consumer attention to the online mall, merchandise with a product related interest, and merchandising cues with promotions such as recommendation and links that induce the desire to pruchase. These three steps might be seen as the processes for purchase actions. The theoretical rationale for the relationship between VMD and AIDA could be found in Tyagi(2005) that the three steps of consumer-oriented merchandising are a store, a product assortment, and placement, in Omar(1999) that three types of interior display are a architectural design display, commodity display, and point-of-sales(POS) display, and in Davies and Ward(2005) that the retail store interior image is related to an atmosphere, merchandise, and in-store promotion. Lee et al(2000) suggested as the web merchandising components a merchandising cues, a shopping metaphor which is an assistant tool for search, a store design, a layout(web design), and a product assortment. The store design which includes differentiation, simplicity and navigation is supposed to be related to the attention to the virtual store. Second, the merchandise dimensions comprising product assortments, visual information and product reputation have to do with the interest in the product offerings. Finally, the merchandising cues that refer to merchandiser(MD)'s recommendation of products and providing the hyperlinks to relevant goods for the shopper is concerned with attempt to induce the desire to purchase. The questionnaire survey was carried out to collect the data about the consumers who would shop at internet shopping malls frequently. To select the subject malls, the mall ranking data announced by a mall rating agency was used to differentiate the most popular and least popular five mall each. The subjects was instructed to answer the questions after navigating the designated mall for five minutes. The 300 questionnaire was distributed to the consumers, 166 samples were used in the final analysis. The empirical testing focused on identifying and confirming the dimensionality of VMD and its subdimensions using a structural equation modeling method. The confirmatory factor analysis for the endogeneous and exogeneous variables was carried out in four parts. The second-order factor analysis was done for a store design, a merchandise, and a merchandising cues, and first-order confirmatory factor analysis for the attitude toward the VMD. The model test results shows that the chi-square value of structural equation is 144.39(d.f 49), significant at 0.01 level which means the proposed model was rejected. But, judging from the ratio of chi-square value vs. degree of freedom, the ratio was 2.94 which smaller than an acceptable level of 3.0, RMR is 0.087 which is higher than a generally acceptable level of 0.08. GFI and AGFI is turned out to be 0.90 and 0.84 respectively. Both NFI and NNFI is 0.94, and CFI 0.95. The major test results are as follows; first, the second-order factor analysis and structural equational modeling reveals that the differentiation, simplicity and ease of identifying current status of the transaction are confirmed to be subdimensions of store design and to be a significant predictors of the dependent variable. This result implies that when designing an online shopping mall, it is necessary to differentiate visually from other malls to improve the effectiveness of the communications of store design. That is, the differentiated store design raise the contrast stimulus to sensory organs to promote the memory of the store and to have a favorable attitude toward the VMD of a store. The results that navigation which means the easiness of identifying current status of shopping affects the attitude to VMD could be interpreted that the navigating processes via the hyperlinks which is characteristics of an internet shopping is a complex and cognitive process and shoppers are likely to lack the sense of overall structure of the store. Consequently, shoppers are likely to be alost amid shopping not knowing where to go. The orientation tool enhance the accessibility of information to raise the perceptive power about the store environment.(Titus & Everett 1995) Second, the primary dimension of merchandise and its subdimensions was confirmed to be unidimensional respectively, have a construct validity, and nomological validity which the VMD dimensions supposed to have a positive correlation with the dependent variable. The subdimensions of product assortment, brand fame and information provision proved to have a positive effect on the attitude toward the VMD. It could be interpreted that the more plentiful the product and brand assortment of the mall is, the more likely the shoppers to favor it. Brand fame and information provision as well affect the VMD attitude, which means that the more famous the brand, the more likely the shoppers would trust and feel familiar with the mall, and the plentifully and visually presented information could have the shopper have a favorable attitude toward the store VMD. Third, it turned out to be that merchandising cue of product recommendation and hyperlinks affect the VMD attitude. This could be interpreted that recommended products could reduce the uncertainty related with the purchase decision, and the hyperlinks to relevant products would help the shopper save the cognitive effort exerted into the information search and gathering, which could lead to a favorable attitude to the VMD. This study tried to sheds some new light on the VMD of online store by reviewing the variables mentioned to be relevant with offline VMD in the existing literatures, and tried to link the VMD components from the perspective of AIDA model. The effect size of the VMD dimensions on the attitude was in the order of the merchandise, the store design and the merchandising cues.It is said that an internet has an unlimited place for display, however, the virtual store is not unlimited since the consumer has a limited amount of cognitive ability to process the external information and internal memory. Particularly, the shoppers are likely to face some difficulties in decision making on account of too many alternative and information overloads. Therefore, the internet shopping mall manager should take into consideration the cost of information search on the part of the consumer, to establish the optimal product placements and search routes. An efficient store composition would be possible by reducing the psychological burdens and cognitive efforts exerted to information search and alternatives evaluation. The store image is in most part determined by the product category and its brand it deals in. The results of this study support this proposition that the merchandise is most important to the VMD attitude than other components, the manager is required to take a strategic approach to VMD. The internet users are getting more accustomed and more knowledgeable about the internet media and more likely to accept the internet as a shopping channel as the period of time during which they use the internet to shop become longer. The web merchandiser should be aware that the product introduction using a moving pictures and a bulletin board become more important in order to present the interactive product information visually and communicate with customers more actively, therefore leading to making the quantity and quality of product information more rich.

• Journal of Global Scholars of Marketing Science
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• v.18 no.4
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• pp.157-194
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• 2008

The popularity of communities on the internet has captured the attention of marketing scholars and practitioners. By adapting to the culture of the internet, however, and providing consumer with the ability to interact with one another in addition to the company, businesses can build new and deeper relationships with customers. The economic potential of online communities has been discussed with much hope in the many popular papers. In contrast to this enthusiastic prognostications, empirical and practical evidence regarding the economic potential of the online community has shown a little different conclusion. To date, even communities with high levels of membership and vibrant social arenas have failed to build financial viability. In this perspective, this study investigates the role of various kinds of influencing factors to online community loyalty and basically suggests the framework that explains the process of building purchase loyalty. Even though the importance of building loyalty in an online environment has been emphasized from the marketing theorists and practitioners, there is no sufficient research conclusion about what is the process of building purchase loyalty and the most powerful factors that influence to it. In this study, the process of building purchase loyalty is divided into three levels; characteristics of community site such as content superiority, site vividness, navigation easiness, and customerization, the mediating variables such as self congruency, consumer experience, and consumer to consumer interactivity, and finally various factors about online community loyalty such as visit loyalty, affect, trust, and purchase loyalty are those things. And the findings of this research are as follows. First, consumer-to-consumer interactivity is an important factor to online community purchase loyalty and other loyalty factors. This means, in order to interact with other people more actively, many participants in online community have the willingness to buy some kinds of products such as music, content, avatar, and etc. From this perspective, marketers of online community have to create some online environments in order that consumers can easily interact with other consumers and make some site environments in order that consumer can feel experience in this site is interesting and self congruency is higher than at other community sites. It has been argued that giving consumers a good experience is vital in cyber space, and websites create an active (rather than passive) customer by their nature. Some researchers have tried to pin down the positive experience, with limited success and less empirical support. Web sites can provide a cognitively stimulating experience for the user. We define the online community experience as playfulness based on the past studies. Playfulness is created by the excitement generated through a website's content and measured using three descriptors Marketers can promote using and visiting online communities, which deliver a superior web experience, to influence their customers' attitudes and actions, encouraging high involvement with those communities. Specially, we suggest that transcendent customer experiences(TCEs) which have aspects of flow and/or peak experience, can generate lasting shifts in beliefs and attitudes including subjective self-transformation and facilitate strong consumer's ties to a online community. And we find that website success is closely related to positive website experiences: consumers will spend more time on the site, interacting with other users. As we can see figure 2, visit loyalty and consumer affect toward the online community site didn't directly influence to purchase loyalty. This implies that there may be a little different situations here in online community site compared to online shopping mall studies that shows close relations between revisit intention and purchase intention. There are so many alternative sites on web, consumers do not want to spend money to buy content and etc. In this sense, marketers of community websites must know consumers' affect toward online community site is not a last goal and important factor to influnece consumers' purchase. Third, building good content environment can be a really important marketing tool to create a competitive advantage in cyberspace. For example, Cyworld, Korea's number one community site shows distinctive superiority in the consumer evaluations of content characteristics such as content superiority, site vividness, and customerization. Particularly, comsumer evaluation about customerization was remarkably higher than the other sites. In this point, we can conclude that providing comsumers with good, unique and highly customized content will be urgent and important task directly and indirectly impacting to self congruency, consumer experience, c-to-c interactivity, and various loyalty factors of online community. By creating enjoyable, useful, and unique online community environments, online community portals such as Daum, Naver, and Cyworld are able to build customer loyalty to a degree that many of today's online marketer can only dream of these loyalty, in turn, generates strong economic returns. Another way to build good online community site is to provide consumers with an interactive, fun, experience-oriented or experiential Web site. Elements that can make a dot.com's Web site experiential include graphics, 3-D images, animation, video and audio capabilities. In addition, chat rooms and real-time customer service applications (which link site visitors directly to other visitors, or with company support personnel, respectively) are also being used to make web sites more interactive. Researchers note that online communities are increasingly incorporating such applications in their Web sites, in order to make consumers' online shopping experience more similar to that of an offline store. That is, if consumers are able to experience sensory stimulation (e.g. via 3-D images and audio sound), interact with other consumers (e.g., via chat rooms), and interact with sales or support people (e.g. via a real-time chat interface or e-mail), then they are likely to have a more positive dot.com experience, and develop a more positive image toward the online company itself). Analysts caution, however, that, while high quality graphics, animation and the like may create a fun experience for consumers, when heavily used, they can slow site navigation, resulting in frustrated consumers, who may never return to a site. Consequently, some analysts suggest that, at least with current technology, the rule-of-thumb is that less is more. That is, while graphics etc. can draw consumers to a site, they should be kept to a minimum, so as not to impact negatively on consumers' overall site experience.

• Korean small business review
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• v.31 no.4
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• pp.67-93
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• 2009

The purpose of this paper is to explore the relations between financial constraints and dividend smoothing of innovative small and medium sized enterprises(SMEs) listed on Korea Securities Market and Kosdaq Market of Korea Exchange. The innovative SMEs is defined as the firms with high level of R&D intensity which is measured by (R&D investment/total sales) ratio, according to Chauvin and Hirschey (1993). The R&D investment plays an important role as the innovative driver that can increase the future growth opportunity and profitability of the firms. Therefore, the R&D investment have large, positive, and consistent influences on the market value of the firm. In this point of view, we expect that the innovative SMEs can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. And also, we expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Aivazian et al.(2006) exert that the financial unconstrained firms with the high accessibility to capital market can adjust dividend payment faster than the financial constrained firms. We collect the sample firms among the total SMEs listed on Korea Securities Market and Kosdaq Market of Korea Exchange during the periods from January 1999 to December 2007 from the KIS Value Library database. The total number of firm-year observations of the total sample firms throughout the entire period is 5,544, the number of firm-year observations of the dividend firms is 2,919, and the number of firm-year observations of the non-dividend firms is 2,625. About 53%(or 2,919) of these total 5,544 observations involve firms that make a dividend payment. The dividend firms are divided into two groups according to the R&D intensity, such as the innovative SMEs with larger than median of R&D intensity and the noninnovative SMEs with smaller than median of R&D intensity. The number of firm-year observations of the innovative SMEs is 1,506, and the number of firm-year observations of the noninnovative SMEs is 1,413. Furthermore, the innovative SMEs are divided into two groups according to level of financial constraints, such as the financial unconstrained firms and the financial constrained firms. The number of firm-year observations of the former is 894, and the number of firm-year observations of the latter is 612. Although all available firm-year observations of the dividend firms are collected, deletions are made in the case of financial industries such as banks, securities company, insurance company, and other financial services company, because their capital structure and business style are widely different from the general manufacturing firms. The stock repurchase was involved in dividend payment because Grullon and Michaely (2002) examined the substitution hypothesis between dividends and stock repurchases. However, our data structure is an unbalanced panel data since there is no requirement that the firm-year observations data are all available for each firms during the entire periods from January 1999 to December 2007 from the KIS Value Library database. We firstly estimate the classic Lintner(1956) dividend adjustment model, where the decision to smooth dividend or to adopt a residual dividend policy depends on financial constraints measured by market accessibility. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between current payout rato and target payout ratio each year. In the Lintner model, dependent variable is the current dividend per share(DPS_t), and independent variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t). We hypothesized that firms adjust partially the gap between the current dividend per share(DPS_t) and the target payout ratio(Ω) each year, when the past dividend per share(DPS_t-1) deviate from the target payout ratio(Ω). We secondly estimate the expansion model that extend the Lintner model by including the determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory. In the expansion model, dependent variable is the current dividend per share(DPS_t), explanatory variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t), and control variables are the current capital expenditure ratio(CEA_t), the current leverage ratio(LEV_t), the current operating return on assets(ROA_t), the current business risk(RISK_t), the current trading volume turnover ratio(TURN_t), and the current dividend premium(DPREM_t). In these control variables, CEA_t, LEV_t, and ROA_t are the determinants suggested by the residual dividend theory and the agency theory, ROA_t and RISK_t are the determinants suggested by the dividend signaling theory, TURN_t is the determinant suggested by the transactions cost theory, and DPREM_t is the determinant suggested by the catering theory. Furthermore, we thirdly estimate the Lintner model and the expansion model by using the panel data of the financial unconstrained firms and the financial constrained firms, that are divided into two groups according to level of financial constraints. We expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, because the former can finance more easily the investment funds through the market accessibility than the latter. We analyzed descriptive statistics such as mean, standard deviation, and median to delete the outliers from the panel data, conducted one way analysis of variance to check up the industry-specfic effects, and conducted difference test of firms characteristic variables between innovative SMEs and noninnovative SMEs as well as difference test of firms characteristic variables between financial unconstrained firms and financial constrained firms. We also conducted the correlation analysis and the variance inflation factors analysis to detect any multicollinearity among the independent variables. Both of the correlation coefficients and the variance inflation factors are roughly low to the extent that may be ignored the multicollinearity among the independent variables. Furthermore, we estimate both of the Lintner model and the expansion model using the panel regression analysis. We firstly test the time-specific effects and the firm-specific effects may be involved in our panel data through the Lagrange multiplier test that was proposed by Breusch and Pagan(1980), and secondly conduct Hausman test to prove that fixed effect model is fitter with our panel data than the random effect model. The main results of this study can be summarized as follows. The determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory explain significantly the dividend policy of the innovative SMEs. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between the current payout ratio and the target payout ratio each year. In the core variables of Lintner model, the past dividend per share has more effects to dividend smoothing than the current earnings per share. These results suggest that the innovative SMEs maintain stable and long run dividend policy which sustains the past dividend per share level without corporate special reasons. The main results show that dividend adjustment speed of the innovative SMEs is faster than that of the noninnovative SMEs. This means that the innovative SMEs with high level of R&D intensity can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. The other main results show that dividend adjustment speed of the financial unconstrained SMEs is faster than that of the financial constrained SMEs. This means that the financial unconstrained firms with high accessibility to capital market can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Futhermore, the other additional results show that dividend adjustment speed of the innovative SMEs classified by the Small and Medium Business Administration is faster than that of the unclassified SMEs. They are linked with various financial policies and services such as credit guaranteed service, policy fund for SMEs, venture investment fund, insurance program, and so on. In conclusion, the past dividend per share and the current earnings per share suggested by the Lintner model explain mainly dividend adjustment speed of the innovative SMEs, and also the financial constraints explain partially. Therefore, if managers can properly understand of the relations between financial constraints and dividend smoothing of innovative SMEs, they can maintain stable and long run dividend policy of the innovative SMEs through dividend smoothing. These are encouraging results for Korea government, that is, the Small and Medium Business Administration as it has implemented many policies to commit to the innovative SMEs. This paper may have a few limitations because it may be only early study about the relations between financial constraints and dividend smoothing of the innovative SMEs. Specifically, this paper may not adequately capture all of the subtle features of the innovative SMEs and the financial unconstrained SMEs. Therefore, we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.