1 CHAPTER 1 INTRODUCTION 1.1. Research Background The increasing preference for online shopping channels is driven by their great convenience, expansive product range, and wealth of product-related information. According to a report by McKinsey & Company (2022), Indonesia's online commerce is both substantial and rapidly growing, with 30 million people transacting online and a market size of at least $8 billion. This market is projected to reach $40 billion within the next five years, with 60% of sales through online commerce and 40% through social commerce. The current online commerce market consists of two key models: e- commerce platforms, such as Tokopedia, Shopee, and Lazada; and social commerce, which involves buying and selling physical goods through social media platforms like Instagram, Facebook, and WhatsApp. The cosmetics and personal care industry emerges as a notable standout within this rapidly growing online market, with Indonesia predicted to become one of the top five markets for cosmetics products in the next decade. Based on the data provided by Statista (2024), the industry is expected to generate $9.17 billion in revenue by 2024, with online sales projected to account for 23.3% of the total revenue. In terms of market segments, personal care holds the largest share, followed by skin care, cosmetics, and fragrances. However, this seemingly positive development often leads to consumer confusion, which is defined as having difficulty deciding when confronted with information that is too similar, too abundant, or unclear (Mitchell et al., 2005). In highly competitive and rapidly growing industries, such as cosmetics and personal care, companies frequently develop incremental products to meet diverse customer needs or to gain market share from competitors. To aid customers in choosing between these derivative products, companies provide more detailed product specifications and features. However, this abundance of information can inadvertently result in consumer confusion (Fang, 2019). 2 Consumer confusion is particularly prominent among female consumers. Psychological studies suggest that women are generally more detail-oriented and consider more factors when making purchasing decisions compared to men (Meyers- Levy and Maheswaran, 1991). This leads them to engage more extensively in comparison shopping and closely scrutinize product details. Females are also reported to have more experience in different product classes than men, which leads them to perceive more advertisement clutter and miscomprehension (Mitchell et al., 2005). While this thoroughness can be beneficial, it also means that women are more likely to experience confusion when confronted with an abundance of product choices and detailed specifications. The issue of consumer confusion becomes even more complex with the evolving digital landscape. The Internet has empowered individuals to access vast amounts of product information, enabling comparison shopping and informed decision-making (Hoffman and Novak, 1996; Evans and Wurster, 1999). However, research in psychology and marketing suggests that human memory has limited processing capacity (Miller, 1956; Jacoby et al., 1974), challenging the assumption that more choices may not always lead to better outcomes. Schwartz (2004) concludes that while some choice is indeed better than none, more choice is not always better than less, as excessive choice can overwhelm consumers, resulting in stress, frustration, and sub- optimal decision-making (Mitchell and Papavassiliou, 1999). This paradox of choice highlights the complexity of consumer decision-making in the digital age. Building on the understanding of consumer confusion, literature further suggests that there exist three dimensions of consumer confusion (Walsh et al., 2007): similarity confusion, overload confusion, and ambiguity confusion. These are categorized as informational sources of consumer confusion (Chauhan and Sagar, 2021). As consumers encounter these different sources of confusion, the role of experience becomes increasingly important. East (1997) suggests that having experience shortens the time taken to make purchase decisions. He notes that inexperienced consumers spend time considering their options and researching before making an initial purchase. However, after gaining experience, they tend to skip this cognitive search process and make decisions more automatically. 3 Moreover, in the context of consumer characteristics, decision-making styles emerge as a significant factor that impacts consumer confusion, and are recognized as individual sources of consumer confusion (Chauhan and Sagar, 2021). Decision- making styles become particularly relevant in this study due to how they can influence the way individuals process information and make choices, particularly in the case of consumer confusion and harm (Sproles, 1990). Consumer confusion holds critical importance due to its profound implications and its substantial impact on marketing strategies employed by companies. Extensive research in the literature has thoroughly explored the various outcomes that consumers face when they encounter confusion during their decision-making processes. Areas of study include the effects on decision quality, wherein confused consumers may struggle with decision paralysis (Mitchell and Papavassiliou, 1999). Decision postponement also emerges as a consequence, where uncertainty or overload prompts consumers to delay their purchase decisions (Shiu, 2017). Moreover, cognitive dissonance, stemming from conflicting information or choices, adds another layer of complexity (Mitchell et al., 2005), influencing consumer satisfaction and loyalty. These insights underscore the complex dynamics of consumer behavior in today’s digital market, emphasizing the needs for tailored strategies to address consumer confusion and optimize consumer decision-making experiences. 1.2. Problem Statement Consumer confusion is a growing concern for marketers due to the overwhelming amount of information available in the market. As the number of products and services expands, so does the associated information, making it challenging for consumers to interpret and understand. This leads to feelings of confusion, stress, and anxiety, ultimately influencing their purchasing decisions (Mitchell and Papavassiliou, 1999).