Attitudinal Impact of Online Reviews on Consumer Purchase Decisions

Investigating the Attitudinal Impact of

Online Reviews on Consumer Purchase

Decisions: The Case of Electronic

ParaphernaliaPaper Presented at International Conference on Contemporary Management Practices Creative or Dogmatic

Jagan Institute of Management Studies (JIMS) |www.JimsIndia.org

Mr. Shaunak Roy

Post-Graduate Department of Commerce, St. Xavier’s College

(Autonomous), Kolkata

2

AGENDA

01 02 03 04

Prefatory Observati

ons

Introductory Reflections

Objective of Study

Conclusion

OBSERVATIONS

4

Jagan Institute of Management Studies (JIMS) www.JimsIndia.org

The phenomenal growth saga of AsusTek Computer Inc.

Riders to Success:

Prefatory Observations

1 Direct Customer Feedback Generation

2 Customer-Connect

3 Embracing Social Media Channels of Communication

4 Enhanced Brand Equity

5 Brisk Product Re-engineering

INTRODUCTORY REFLECTION

6


5 years ago : Indian customers would archetypally refer to retail advocates on the shop floor,mass media communications and opinion leaders.

Online Review Sites : Empowered customers offer their own consumption-related advice viapeer-to-peer information exchange networks

Introductory Reflection

Electronic Paraphernalia : Complex information products such as: • pen drives • laptops •memory cards • external hard drives • desktops • tablets • mobile phones

Consumer Purchase Decisions: Guided by former preferences, beliefs, attitudes andexperiences, coupled with valued inputs from marketers, various individuals and other ofinformation service agents

The Internet Era : Active consumers seeking information

7


Influence Mix: IM = IPCE + IM + IIS


Electronic Manufacturing Organizations: In order to maintain competitive buoyancy, theymust position their products closer to the IIS-dependent end, such that the opinions of otherindividuals guide purchase decisions

8


A Conceptual Model of Tapping Credible Volumes of e-WOM to develop Purchase Intentions :

Enterprises in IIS-Dependent Markets : They can diversify more easily than others, becausenovel peer-to-peer information can overcome time-worn impressions about the pros andcons of the said organization

Consumer

Product

Decision Criteria

Retail Brand

Patronage

Perceptual

Influence effects

on products

Accessibility to

Volumes of

WOM

Purchase

Intentions


9


Review of Literature

Reference Study

Politz (1958)the buying process itself is a learning experience and can lead

to a change in attitudes

Dellarocas (2003)With the advent of the Internet, users have been particularly productive in providing opinions or online reviews of virtually

every product imaginable

Lee et al. (2008)Online reviews, in contrast to those provided by

merchandisers themselves, convey more consumer-centric product information about purchase and usage experiences

10


Review of Literature

Reference Study

Resnick and Zeckhauser (2002)

Consumers’ online reviews have a direct impact on transactions; it is critical to design an effective online review system, where all the activities, ranging from review contributions to review harnessing

occurs

Arndt (1967)WOM communication is verbal, person-to-person communication

between a receiver and a communicator, whom the receiver perceives as non-commercial, with regard to a product, service or a provider

Luca and Zervas(2013)

Need to redirect marketing resources to methodical tracking, coding, and quantifying of information from review sites, user forums, and other social media, rather than merely focussing on measuring the

preferences, satisfaction, and loyalty of individual consumers

OBJECTIVE OF STUDY

12


To unfurl the most important factors that shape consumer attitudes by virtue of online reviewsso as to frame their purchase decisions.

Primary Objective of Study

13


Hypothesis Formulation

H0A Attitude towards Online Reviews does not depend on gender

H0B

Attitude towards Online Reviews depend on genderH1A

H1B

There is no significant difference between consumers’ level of satisfaction with reference toonline reviews and their income levels

There is a significant difference between consumers’ level of satisfaction with reference toonline reviews and their level of income

14


Theoretical Modelling

15


1 Sample Size: 168 respondents (Response Rate: 91.3%)

2Questionnaire: 29 questions of which several questions were adopted from Zou et al. (2011)study while few were self-developed to suit the psychology and preferences of Indian consumers

3 Sampling Method: Stratified Random Sampling Technique

Methodology and Data Collection

16


Revelations from StudyDemographic Profiling : Descriptive Statistics

Age Gender Monthly Income

N 168 168 168

Mean 2.48 1.52 2.35

Standard Deviation 0.819 0.501 1.214

Variance 0.670 0.251 1.475

17


Revelations from StudyDemographic Profiling : Age Distribution

Below 18

18-2930-44

45-60

Above 60

[ 4.2% ]

[ 57.7% ][ 26.2% ]

[2.4% ]

[ 9.5% ]

18


Revelations from StudyDemographic Profiling : Gender Distribution

Male

Female[ 51.8% ]

[ 48.2% ]

19


Revelations from StudyDemographic Profiling : Monthly income pattern

Less than INR 10000

INR 10001 - INR 25000

INR 25001 - INR 50000

INR 50000 - INR 75000

Above INR 75000

20


Revelations from StudyKMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .803

Bartlett’s Test of Sphericity

Approx. Chi-Square 1387.966

df 91

Sig. 0.000

Since p < 0.05 at 5% level, the appropriateness of factor analysis can be ascertained

21


Revelations from StudyTotal Variance Explained

Component

Initial Eigen Values Rotation Sums of Squared Loadings

Total % of variance Cumulative % Total % of variance Cumulative %

1 3.385 24.176 24.176 3.310 23.644 23.644

2 1.425 10.177 34.352 1.400 9.999 33.644

3 1.216 8.685 43.037 1.290 9.211 42.855

4 1.102 7.870 50.907 1.120 8.002 50.857

5 1.089 7.776 58.684 1.096 7.827 58.684

Basis: Eigen values > 1 Extraction Method: Principal Component Analysis

22


Revelations from StudyRotated Component Matrix : Components based on Factor Loadings

component 1 component 2 component 3 component 4 component 5

ORPD16 [0.816] ORPD13 [0.839] ORPD5 [0.797] ORPD1 [0.632] ORPD7 [0.744]

ORPD9 [0.752] ORPD17 [0.837] ORPD11 [0.699] ORPD18 [0.524] ORPD3 [0.444]

ORPD8 [0.675] ORPD14 [0.832] ORPD4 [0.681] ORPD2 [0.419]

ORPD6 [0.530] ORPD12 [0.822]

ORPD10 [0.236]

ORPD15 [0.114]

23


Revelations from StudyH0A: Attitude towards Online Reviews does not depend on genderH1A: Attitude towards Online Reviews depend on gender

Attitude towards Online ReviewsTotal

Favourable Neutral Unfavourable

Gender of RespondentsMale 67 12 2 81

Female 23 49 15 87

Total 90 61 17 168

Pearson Chi-Square (X2) : 135.559 ; p=0.000Conclusion: H0A is rejected and thus we can conclude that attitude towards online reviewsdepends significantly on gender

24


Revelations from StudyH0B: There is no significant difference between consumers’ level of satisfaction with reference toonline reviews and their income levels.H1B: There is a significant difference between consumers’ level of satisfaction with reference toonline reviews and their level of income.

The significance value for Levene’s test = 0.158 [F (1, 77) = 0.158]Since it is greater than 0.05 (Levene, 1960), we can conclude that we have not violated theassumption of homogeneity of variance

Levene Statistic df1 df2 Sig.

2.035 1 77 0.158

25


Revelations from StudySince the assumption of homogeneity of variance is tenable, we look at the ANOVA table:

p ≤ 0.05Hence, there exists a significant difference between consumers’ level of satisfaction with regard toonline reviews and their monthly income levels

Sum of Squares df Mean Square F Sig.

Between Groups 11.657 1 11.657 41.057 0.000

Within Groups 21.862 77 0.284

Total 33.519 78

CONCLUSION

27


Consumers today are no longer uneasy in referring to the Internet to peruse online reviews

Consumers who use smartphone Android apps such as idealo to compare prices, can minimizethe emphasis of marketers’ inputs on their decisions

Conclusive Deliberation

From this study, we have been able to conclude that consumers essentially rely on the lengthand depth of online reviews, their clarity and assurance while sustaining moderate levels ofknow-how on their part

28



62.5% of consumers (n=105) resort to online shopping websites such as Flipkart,Amazon or Snapdeal to make informed purchase choices.

61.9% of the respondents (n=104) rely on WOM to make their purchases.

50% of the respondents always prefer to stay online (smartphones).

Other Statistics revealed through the study:

29



The minute tracking of customer information-referral sources by marketers will leadto success.

As the influence mix evolves further, firms positioning themselves as low-pricedplayers are more susceptible to negative e-WOM activity because consumers findnegative WOM to be more credible and likely to recur in their case.

How can Marketers Benefit?

Essence: Online Reviews (e-WOM) have served as a blessing in disguise as it has offeredcustomers with a feeling of comfort, solace and safety prior to or post-purchase

Jagan Institute of Management Studies

31


About JIMS

JIMS Rohini is one of the leading MBA institutes of Delhi. We impart professional education both at post graduate and undergraduate levels in the fields of management and information technology.

Our PGDM program is approved by the AICTE and is

accredited from NBA for excellence in quality education.

PGDM program has also been granted equivalence to

MBA degree by the AIU. We offer specialized PGDM

programs in International Business and Retail as well.

JIMS, Rohini, Sector 5 also offers technical programs viz BBA,

BCA & MCA affiliated from GGSIPU.

Established in 1993, JIMS completed its 20 years of

Excellence in 2013. We offer excellent academic

structure, industry interaction and job opportunities.

Address3, Institutional Area, Sector-5, Rohini(Near Rajiv Gandhi Cancer Research Institute), Delhi-110085.

Contact DetailsPhone : 011-45184000/1/2Mobile : +91-9871097501Email : [email protected]

GET IN

TOUCH

Web Addresswww.jimsindia.org

Facebook: https://www.facebook.com/JimsDelh

Twitter: https://twitter.com/JIMSsec5Rohini

G+: https://plus.google.com/+jimsrohini

YouTube: https://www.youtube.com/user/jimsquery/

LinkedIn:https://www.linkedin.com/company/jagan-institute-of-management-studies-jims-

Slideshare: http://www.slideshare.net/JimsIndia

Pinterest: https://www.pinterest.com/jimsrohini/

https://www.facebook.com/JimsDelhi?sk=wall

https://twitter.com/JIMSsec5Rohini

https://plus.google.com/+jimsrohini/posts?hl=en

//www.google.com/url?q=https:/www.youtube.com/user/jimsquery/

https://www.linkedin.com/company/jagan-institute-of-management-studies-jims-

http://www.slideshare.net/JimsIndia

//www.google.com/url?q=https:/www.pinterest.com/jimsrohini/

Attitudinal Impact of Online Reviews on Consumer Purchase Decisions

Education

Transcript of Attitudinal Impact of Online Reviews on Consumer Purchase Decisions