Ewom: The Effects of Online Consumer Reviews On Purchasing Decision of Electronic Goods
Ewom: The Effects of Online Consumer Reviews On Purchasing Decision of Electronic Goods
Ewom: The Effects of Online Consumer Reviews On Purchasing Decision of Electronic Goods
Abstract
Internet has become the primary source of information for a large number of consumers and it
has dramatically changed the consumer behaviour. One of the main changes in modern
consumer behaviour has been the transition from a passive to an active and informed
consumer. Internet enables customers to share their opinions on, and experiences with, goods
and services with a multitude of other consumers. Online consumer reviews are used by
prospective buyers of related products who are interested in obtaining more information from
people who have purchased and used a product of interest.
Word-of-mouth (WOM) is one of the most important information sources when a consumer is
making a purchase decision. The arrival and expansion of the Internet has extended
consumers' options for gathering product information by including other consumers'
comments, posted on the Internet, and has provided consumers opportunities to offer their
own consumption-related advice by engaging in electronic word-of-mouth (eWOM). eWOM
can be defined as all informal communications directed at consumers through Internet-based
technology related to the usage or characteristics of particular goods and services, or their
sellers.
The aim of this study is to assess the impact of, one type of electronic word-of-mouth
(eWOM), the online consumer review, on purchasing decision of electronic products. This
empirical study also focuses on the relationship between reviews and purchasing behaviour.
An instrument was prepared to measure the proposed constructs, with questionnaire items
taken from prior studies but adapted to fit the context of e-commerce. The survey was applied
to academicians in Turkey through internet. The data was analyzed using the SPSS package.
The results show that consumer reviews have a causal impact on consumer purchasing
behaviour and they have an effect on choosing the products by consumer. Finally, the results
and their implications are discussed.
LITERATURE REVIEW
Word-of-mouth (WOM) has been recognized as one of the most influential resources of
information transmission since the beginning of human society (Godes and Mayzlin 2004;
Maxham and Netemeyer 2002). Prior to the Internet era, consumers shared each others’
product-related experiences through traditional WOM (e.g.discussions with friends and
family)(Sundaram et.al, 1998). The Internet's global nature has created a medium for
electronic word-of-mouth (eWOM) communication between consumers who have never met
(Gruen et al., 2006). Today, the Internet makes it possible for consumers to share experiences
and opinions about a product via eWOM activity. The eWOM phenomenon has been
changing people’s behavior because of the growth of Internet usage. People often make
offline decisions on the basis of online information; furthermore, they tend to rely on the
opinions of other consumers when making decisions about matters such as which movie to
watch or what stocks to invest in (Dellarocas, 2003). The online market enables customers to
write recommendations that influence potential consumers (Lee et al., 2008). The electronic
word-of-mouth is network user’s information exchange and discussions on some products or
services by network media (Sun et. al., 2006). Hennig-Thurau et al.,(2004:39) refer to eWOM
as any positive or negative statement made by potential, actual, or former customers about a
product or company, which is made available to a multitude of people and institutions via the
Internet. Similarly, Godes and Mayzlin (2004) define eWOM that is measurable since
comments on a product are written and available in the websites.
Online consumer reviews (OCR), one type of electronic word-of-mouth, provide product
information and recommendations from the customer perspective (Lee et al., 2008). OCR
have become increasingly important as consumers continue to purchase products online.
When consumers are not able to judge a product in person, they often rely on this eWOM
transfer to mitigate risks regarding product quality and the truthfulness of the seller. Online
consumer reviews play a major role in the decision to purchase products or services,
according to the latest survey from Opinion Research Corporation. Nearly two-thirds (61%)
of respondents reported consulting online reviews, blogs and other sources of online customer
feedback before purchasing a new product or service, with search engines being the preferred
method of conducting the research. This survey also found that 80 % of respondents said they
seek out information online for a particular brand of electronic (Werbler and Harris, 2008).
Additionally, from a report made by Nelson Research Company, the 3rd ―most trusted
advertising method‖ is ―consumer’s opinions posted on the network (Xiaofen and Yiling,
2009). According to the Nielsen Global Online Consumer Survey, 70 % of consumers trust
opinions posted online (Cherecwich, 2009) . In a recent survey, conducted by BIGresearch,
consumers say that word of mouth is still the number one influencer in their electronics
(44.4%) purchases (BIGresearch, 2008).
Compared with traditional word-of-mouth, the electronic word-of-mouth has the features of
extensiveness of spreading information, fast, large volume of information, savable, instant to
receive, anonymous and transcend space and time (Hennig-Thurau et al., 2004). Throughout
the eWOM activity, consumers can obtain high levels of market transparency. In addition,
they can take on a more active role in the value chain and influence products and prices
according to individual preferences. And they can make their opinions easily accessible to
other Internet users (Dellarocas, 2003). Because of such significance and popularity of
eWOM communication, the importance of WOM has been widely documented in the existing
literature (Zhu and Zhang, 2006). Bickart and Schindler’s (2001) findings suggest that
product information on online forums has greater credibility, relevance and more likely to
evoke empathy with consumers than information on marketer-designed websites. According
to the results of the study made by Park and Lee (2009) show that the eWOM effect is greater
for negative eWOM than for positive eWOM. The survey results from 616 participants of an
online forum suggest that customer know-how exchange impacts customer perceptions of
product value and likelihood to recommend the product (Gruen et. al., 2006). An other
reseacrh conducted by Park and Kim, (2008), focusing on online consumer reviews as eWOM
messages, explains this contradiction using the cognitive fit theory. The results show that
cognitive fit occurs when experts (novices) process the reviews framed as attribute-centric
(benefit-centric). Xiaofen and Yiling (2009) also found that the massage impression of
electronic word-of-mouth and leader’s comments have much influence on consumer’s
willingness of buying. As a result, eWOM plays an increasingly significant role in consumer
purchase decisions (Duan, Gu and Whinston, 2008b).
Earlier studies concluded that consumers ascribe more value to recommendations by fellow
consumers than to recommendations by professional reviewers. According to these studies,
consumers perceive fellow consumers’ opinions to be less biased. They also find fellow
consumers’ experiences easier to relate to (Bickart and Schindler, 2001). Also numerous
empirical studies (Dellarocas et al., 2006; Houser and Wooders, 2006; Menlik and Alm, 2002)
show that buyers seriously consider online feedback when making purchasing decisions.
Additionally, Goldenberg et al. (2001) showed a consumer’s decision-making process is
strongly influenced by eWOM. Similarly, Chevlier and Mayzlin (2006) examined the effect
of consumer reviews on books at www.amazon.com and www.barnesandnoble.com, and
found that eWOM can significantly influence book sales. On the contrary, some prior studies
reported that online user-generated reviews are perceived as having lower credibility than
traditional WOM due to the absence of source cues on the Internet (Smith et al., 2005). For
this reason, the influence of online consumer reviews needs to be further tested in different
contexts.
METHODOLOGY
In order to remain consistent with prior studies, measures were adopted or transferred from
previous studies and associated theories. 44 total measures were utilized in order to capture
the various latent constructs, in which responses were measured by a 5-point Likert-type scale
ranging from 1 = disagree to 5= full agree. In order to validate the instrument, 75
academicians in five different university assessed the relevance of the instruments. Some
modifications were made to the questionnaire, on the basis of the comments collected
throughout this pilot study. After the pilot study a final questionnaire was developed and
administered to 604 academicians were randomly selected from Turkey with using
surveymonkey.com is an online survey tool that enables users to create their own Web-based
surveys. The research was conducted during the summer semester of the 2009 academic year.
The questionnaires were prepared in two parts. One part of the questionnaires was related to
the demographic information of the academicians and the other part was related to the online
consumer reviews perception of them. The reliability coefficient for the construct ranged 0.81,
which exceeded the recommended level of 0.70 (Nunnally, 1978). In total, 750 questionnaires
were distributed to the selected samples, of which 675 (87.3%) were completed by the
respondents. 604 (80.5%) questionnaires were finally adopted for further data analysis, after
eliminating any questionnaires that had not been properly completed. The data analysis was
carried out with using SPSS 13.0 package.
In order to reduce data and to classify variables, factor analysis was applied. Factor analysis is
one of the good tools used to verify the construct validation for a model (Hair et al., 1998).
Before factor analysis, the adequacy of data for factor analyze should be examined. For this
purpose, Kaiser-Meyer-Okin (KMO) and Bartlett test was conducted. KMO value is
calculated as 0,896 for adequate of sample. Kaiser (1974) recommends accepting values
greater than 0.5 as acceptable. So the KMO value shows that data are suitable of factor
analysis. According to the results of Bartlett test, Approx. Chi-Square was calculated as 6902,
847 and highly significant level was p=000. The results show that sample and data are
adequate for factor analysis and therefore factor analysis is appropiate.
FINDINGS
Table 1 summarizes characteristics of the 604 respondents. 369 respondents (61.1%) were
male and 235 (38.9%) were female. Most (n= 263, 43.0%) were 31–40 years old. A
significant number of respondents (n=328, 54.3%) studied in social sciences field. The
average frequency of internet usage was 20 or more hours in a week. Furthermore, majority of
respondents (n= 505, 83.6%) have made an online purchase from internet before.
Approximately, 272 respondents (45,0%) buy electronic goods online more than once a year.
Gender
Male 369 61,1
Female 235 38,9
Monthly income(TL)
1001-1500 60 9,9
1501-2000 252 41,7
2001-2500 109 18,3
2501 or more 183 30.3
Academic field
Natural Sciences 216 35,8
Social Sciences 328 54,3
Medical Sciences 60 9,9
To describe the relationship between factors and 27 variables, Principal Components Analysis
was conducted. As a result of the component analysis, rotated component matrix table was
formed. Table 2 shows the variables and their related factor. Six factors were defined
according to their relationship with variables which are; (1) Reelated to reviews’s
characteristics; (2) Related to reviewer (writer of review); (3) Related to web site that present
the reviews; (4) Related to significance of reviews; (5) Related to the type of advice and (6)
Related to product.
Table 2: Rotated Component Matrix
Component
1 2 3 4 5 6
To what extent do product review websites influence your
,206 ,064 ,106 ,700 ,029 ,277
online purchase decisions?
How important do you think online product reviews are for
,371 -,041 ,079 ,719 -,066 -,022
consumers?
How many online consumer reviews do you read before
,200 ,021 ,083 ,757 ,179 -,155
purchase?
Does affect the price of product to visit the online
,279 ,052 ,106 ,215 -,144 ,687
consumer reviews?
Which of the following items about product on the web do
,227 -,041 ,118 ,287 -,268 -,540
you most affect ?
If I have little experience with a product, I often search
,481 -,105 ,196 ,013 ,403 -,034
information on the web about the product
When I buy a product online, the reviews presented on the
,731 -,014 ,200 ,322 ,066 -,007
website are helpful for my decision making
When I buy a product online, the reviews presented on the
,728 ,024 ,127 ,256 ,033 -,053
website make me confident in purchasing the product.
When I buy a product online, the impact of positive
reviews on the web effect is greater for electronic goods on ,727 ,086 ,076 ,185 -,042 ,148
my purchasing decision.
When I buy a product online, the impact of negative
reviews on the web effect is greater for electronic goods on ,642 ,068 ,114 ,185 ,111 ,114
my purchasing decision.
Simple-recommendation reviews are subjective, emotional
-,068 ,098 ,043 ,071 ,785 -,029
and have no support for arguments.
Attribute-value recommendations are specific, clear and
,444 -,009 ,063 ,043 ,589 ,095
having reasons for arguments.
Recency of product reviews posted on the website affect
-,047 ,400 ,233 -,001 ,002 ,152
my purchase decision
Consistency of other reviews posted on the website affect
,538 ,316 ,308 ,010 ,094 -,034
my purchase decision.
The number of product reviews affect my purchase
,632 ,091 ,251 ,263 ,132 ,014
decision.
Received high ratings for product affect my purchase
,441 ,419 ,159 ,251 -,083 -,182
decision.
The reviewer age affect my purchase decision. ,524 ,260 ,209 -,130 -,224 -,158
The reviewer gender affect my purchase decision. ,195 ,679 ,061 -,061 ,076 -,075
The reviewer residence affect my purchase decision. ,072 ,744 -,168 -,113 -,007 ,059
The reviewer’s frequency of posting reviews affect my
,004 ,824 ,001 ,003 -,073 ,032
purchase decision.
If the reviewers use the nick name or the real name affect
,125 ,647 ,182 ,179 ,065 -,069
my purchase decision.
Other reviewers’ rating of usefulness of the review affect
,016 ,723 ,222 ,045 ,047 ,039
my purchase decision.
Reliability of the site that present the reviews affect my
,426 ,361 ,294 ,165 -,023 ,100
purchase decision.
Popularity of the web site that present the reviews affect
,360 ,062 ,645 ,213 ,231 -,008
my purchase decision.
If Web site that present the reviews concern to company
,376 ,205 ,604 ,009 -,082 -,124
that I want to buy product, affect my purchase decison
Internationality of the web site that present the reviews
,124 ,195 ,744 ,049 -,001 ,045
affect my purchase decision.
Spelling or grammar mistakes in product review affect my
,226 ,025 ,749 ,114 ,081 ,037
purchase decision.
Extraction Method: Principal Component Analysis. Rotation Method: Quartimax with Kaiser
Normalization. A Rotation Converged in 6 Iterations.
As a result of the factor analysis, the six factors were determined. The six factors and their
variances were given in the Table 3. According to the Table 3, the six factors explained the
56,3% of the total variance. It means the six factors can represent 27 variables.
Table 3. Total Variance Explained
Initial Eigen Values Extraction Sums of Squared Rotation Sums of Squared
Loadings Loadings
Component Total % of Cumulative Total % of Cumulative Total % of Cumulative
Variance % Variance % Variance %
reviews’s
1 7,263 26,901 26,901 7,263 26,901 26,901 4,525 16,758 16,758
characteristics
related to
2 2,969 10,997 37,898 2,969 10,997 37,898 3,407 12,618 29,376
reviewer
related to web
3 1,474 5,459 43,357 1,474 5,459 43,357 2,546 9,428 38,804
site
significance
4 1,352 5,009 48,366 1,352 5,009 48,366 2,241 8,302 47,106
of reviews
5 type of advice 1,142 4,230 52,596 1,142 4,230 52,596 1,443 5,344 52,450
related to
6 1,002 3,710 56,306 1,002 3,710 56,306 1,041 3,856 56,306
product
Extraction Method: Principal Component Analysis.
According to the table 2 and table 3, twenty seven percent of variance shows that buyers’
perception has a positive relationship with reviews’ characteristics such as, helpful for buyers,
make them confident, positive and negative reviews, recency of reviews, consistency of other
reviews, received high ratings for product. Eleven percent of variance shows that details of
reviewer (writer of review) have a positive relationship with reviewer age, gender, residence,
frequency of posting reviews and using the nick name. Five percent of variance shows that the
web site that present the reviews has a positive relationship with reliability of the site,
popularity of the web site, company’s site and internationality of the web site. Five percent of
variance of shows that significance of reviews have a positive relationship with influencing
online purchase decisions, reviews’ level of important and number of reviews buyers’ read
befor purchase. Four percent of variance of shows that type of advice has a positive
relationship with simple-recommendations and attribute-value recommendations. Three
percent of variance of shows that detail of product has a positive relationship with the price of
product.
Table 6 shows that respondents attitudes for the reviewers (writer of reviews). According to
the results are given in Table 6, in order of the arithmetical average, other reviewers’s rating
of usefulness of the review is regarded as more important than other statements. Therefore,
it’s suggested that other reviewers’ evaluations should be presented on web sites. The factor
of reviewer gender and residence are assessed with the least effectiveness on purchasing
decision. It can be said that buyers don’t consider demographic profile of reviewers as a
significant factor.
DISCUSSION
Today, many consumers turn to the internet to research products—whether they buy on the
Web site or later in-store. As they conduct their research, the critical first-step in the purchase
decision, consumers assign more credibility to the opinions of other consumers than to paid
experts or sell copy. For this reason, the major contribution of this study is to explore impact
of the online consumer reviews, one type of eWOM, on purchasing decision. Besides this,
several conclusions can be drawn from these analyses. First, the result of the research has
revealed that there were significant main effects of the reading reviews before purchasing and
buyers’ purchase frequency.
Second, number of reviews have a significant effect on buyers’ purchasing decision due to
they increases the perceived popularity of a product. According to the results approximately
209 (34,6%) respondents read between 4-7 number of reviews before purchasing product.
This research findings confirm that there were significant differences between
buyers’purchase decision and number of reviews.
Third, this study shows that participants agree to characteristics of reviews are effective on
purchasing decision. Specifically, consistency and recency of reviews are more effective on
purchasing decision. It can be said that consumers are more worried about whether the
reviews are true or manipulated. Hence, it is clear that trust plays a role in online consumer
behaviour. In addition to participants assess the attribute-value reviews as clear and specific.
Fourth, other reviewers’s rating of usefulness of the review is regarded as an important factor
that influence the buyers purchasing decision. In a world where the social aspects of Web 2.0
have become a requirement for every website, it should come as no surprise that consumers
put the most trust into the people they know and online opinions from fellow buyers. And
therefore, it’s suggested that other reviewers’ evaluations should be presented on web sites.
Fifth, as a expected result, it’s confirmed that buyers don’t consider demographic profiles
(such as age, gender and residence) of reviewers as a significant factor in purchasing process.
Sixth, the results of the study indicate that most of the surveyed participants agree to
importance of reliability of web site. Therefore, it can be said that reliability, internationality
and popularity of web site is critical for consumer decision.
Seventh, also there was a significant difference between buyers’ internet usage time and
reading reviews. Findings show that participants who use internet too read more online
reviews than others. One more finding of this study is that there was a significant interaction
effect between product price and reading reviews before purchasing. Most participants base a
recommendation on price and convenience. This is especially true in the current economic
climate, where shoppers are increasingly intent upon finding deals.
These findings help marketers to develop strategic plans for future applications. In addition,
under the network environment, the electronic word-of-mouth is the truest reflection of
consumers’ product evaluation; enterprises should concern about the electronic word-of-
mouth and get consumers’ opinion of the brand to improve brand competition force
constantly.
One limitation of the study is that it focused on only electronic goods. Thus, the findings of
this study may not be generally applicable to all products. To supplement this limitation, it can
suggested a possible future research directions. Further research could examine this issue in an
experimental setting by manipulating the type of products. Also future research could
investigate an eWOM effect model on cross-cultural basis. Considering that eWOM is global,
cross-cultural research on the eWOM effect would be an interesting issue.
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