Understanding eWOM (electronic word of mouth) effect on consumer purchase decisions - Research Proposal Example

? Understanding eWOM (electronic word of mouth) effect on consumer purchase decisions- A comparative study Saudis & non Saudis consumers Table of Contents Table of Contents 2 Chapter 1: Introduction / Background 3  Chapter 2: Research Problem / Research Questions  6 Chapter 3: Literature Review / Hypothesis  7 3.1 Electronic Word-Of-Mouth or eWOM & Purchase Decision of Customers 7 3.2 Psychological Model 8 Chapter 4: Theoretical Framework 11 Chapter 5: Research Methodology / Sample Plan 12 Chapter 6: Significance of Research 12 Chapter 7: Research Implication 13 Reference List 15 Chapter 1: Introduction / Background Godes and Mayzlin (2004) defined Electronic word-of-mouth (eWOM) as the exchange of knowledge, likings, idea between consumers. Gruen, Osmonbekov and Czaplewski (2006) stated that Electronic word-of-mouth (eWOM) has direct or indirect relationship with customer loyalty and brand preference of customers and eWOM can also influence value proposition for the company. Due to such multiplicative applications and benefits eWOM, the subject is getting increasing attention from scholars. Park and Lee (2009) argued that eWOM should not be considered as the as extension of digital commercial advertisements created by companies to push the brand rather eWOM should be viewed as non-commercial message created by external stakeholders of the company such as customers. According to Park and Lee (2009), eWOM can be viewed as the word of mouth created by customers through sharing their direct or indirect experiences. Consideration research work of Park and Lee (2009) reveals the fact that eWOM might be created by customers to share their experience without having the knowledge that the sharing can influence purchasing decision of other customers who are going through the eWOM. Hennig-Thurau et al. (2004) pointed out that most of researches in the field of eWOM focuses on issues like influence of word-of-mouth (WOM) on purchase decision of consumers, factors directing consumer behaviour to use eWOM as reliable opinion leader, reliability of WOM in contrast to other marketing information etc. Bickart and Schindler (2001) pointed out that WOM should not be judged with other commercial advertisement of companies rather WOM should be judged in context to theory of planned behaviour concept. Interesting fact is that most of the research scholars conducted research on eWOM, failed to find any significant difference between effect of WOM and eWOM. These research scholars pointed out that WOM can create favourable or unfavourable message direction that can influence purchase intention and product attitude of customers. Chatterjee (2001) argued that consumers perceive WOM as more credible source to judge performance of the product rather than commercial advertisements. In modern days, eWOM can be used as exact alternative of WOM and customers are using eWOM to make purchase decision. So, is this assumption true that there is no difference between eWOM and WOM? Not actually, Park and Lee (2009) stated that eWOM differs from WOM in three aspects, 1- speed of interaction, 2- level interactivity and 3- communication in the virtual world. However, Golan and Zaidner (2008) criticized eWOM for creating confusion regarding credibility of the message among customers using it to know product experience of others. Yes, that is a basic problem with eWOM because text based recommendation messages are shared by anonymous individuals (in the age of competition, there are cyber professionals who get paid for spreading rumours and negative feedback about a brand); hence, it becomes difficult for readers of the text message to check the credibility of the source. These factors should be considered while discussing role of eWOM on consumer purchase decisions. According to Golan and Zaidner (2008), customers still face dilemma in trusting the online text recommendations or eWOM when it comes to making purchase decision and such level of dilemma is directed by perceived social or psychological risk. It is evident from the above discussion that significant amount of confusion and argument exists among research scholars regarding effect of eWOM (electronic word of mouth) effect on consumer purchase decisions. Such level of incompleteness of literature in the field of eWOM has forced the researcher to take up this study and try to shed light on relationship between purchase decision of consumers and effectiveness of eWOM. After going through the literature regarding eWOM, it has been found that although previous researchers tried to understand the dimension of eWOM but none of them tried to understand the impact of socio-demographic variables on effectiveness of eWOM in directing purchase decision of customers. Unfortunately, previous researcher failed to address questions like- will the country or cultural orientation can influence effectiveness of eWOM in directing purchase decision of customers? Such emergent questions have influenced the researcher to develop certain assumptions and research questions for this paper. In this paper, the researcher has selected the topic “Understanding eWOM (electronic word of mouth) effect on consumer purchase decisions- A comparative study Saudis & non Saudis consumers” to address the above mentioned gaps in the literature regarding effectiveness of eWOM on purchase decision of consumers. Saudi Arabian consumers has been selected as the predictors for the study due to two reasons, 1- according to knowledge of the researcher, very few researchers ever tried to conduct research on eWOM in context to Saudi Arabia hence conducting research in context to Saudi Arabia would create new dimension in the field of eWOM literature and 2- In Saudi Arabia, e-commerce transactions, social media use, internet content sharing is growing at a rate of more than 30% annually hence selecting technologically aware Saudi customers can provide valuable input to the research (Al-maghrabi, Dennis and Halliday, 2011). In the next section, the researcher will develop the research questions that have been selected for the study.  Chapter 2: Research Problem / Research Questions  Spero and Stone (2004), Bhattacherjee (2001) and Van Slyke, Comunale and Belanger (2002) found that decision making process of consumers gets affected by information availability through technology integration. As eWOM is the extension of information technology and internet communication adaptation by consumers hence it can be expected that eWOM can influence decision making process of customers. Al-maghrabi, Dennis and Halliday (2011) also found that purchase behaviour of Saudis consumers’ differs from non- Saudi consumers. In such context, the researcher has developed research problem titles as “Understanding eWOM (electronic word of mouth) effect on consumer purchase decisions- A comparative study Saudis & non Saudis consumers.” In the light of this research problem, following research questions can be developed; How moderating effects of eWOM can influence brand attitude and purchase intention of customers? What are the pertinent attributes of eWOM can influence purchase decision of customers? What is the nature of cross-national invariance and congruence between purchase decisions of Saudis & non Saudis consumers influenced by eWOM? Chapter 3: Literature Review / Hypothesis  3.1 Electronic Word-Of-Mouth or eWOM & Purchase Decision of Customers Harrison-Walker (2001) and Sen and Lerman (2007) defined word of mouth (WOM) as the oral person-to-person communication, knowledge sharing, experience sharing regarding product or brand or service between sender and receiver. Well, that is pretty simplistic definition WOM while Hennig-Thurau et al. (2004) stated that WOM may include pictorial expression. According to Hennig-Thurau et al. (2004), WOM is widely considered as non-commercial information source that has been created by customers and accessed by customers. Hennig-Thurau et al. (2004, p. 40) gave definition of eWOM as “any positive or negative statement made by potential, actual, or former customers about a product or company which is made available to multitude of the people and institutes via the Internet.” Till date, the mentioned statement is probably the most comprehensive attempt to define all the aspects of eWOM (Xia and Bechwati, 2008). Harrison-Walker (2001) also pointed out that WOM is perceived as non partial expression that is not biased with strong commercial intent and that is the reason why customers consider WOM as more credible source than commercial advertisement. According to Bickart and Schindler (2001), Although eWOM cannot be considered as mere extension of WOM but it can be defined as form of positive or negative statement that has been made by consumers to share their experience with particular product or service or brand to multitude of people via internet medium (Park and Kim, 2008). According to Park and Kim (2008), eWOM can engage customers in interactive manner and consumers can gather product information from online discussion forum in much more efficient manner rather than acquiring information from commercially biased sources. Godes and Mayzlin (2004) conducted research on influence of eWOM on purchase decision of customers and found that eWOM is considered as most influential source of information while making purchase decision. It is evident from the argument of above research scholars, market transparency can be achieved by consumers through eWOM activity. Incorporation of eWOM practices and consumers get the opportunity to express their grievances regarding product and service quality or suggestion to improve product and service quality to company websites. eWOM practices also give opportunity to consumers to communicate their service or product encounter experience to multitude of audiences via internet medium and excessive negative comments might force a company to address consumer grievances (Brown, Broderick and Lee, 2007). In such context, it can be said that eWOM gives consumers the feeling of being empowered to take part in the value chain of company as such feeling of empowerment might have increased importance of eWOM among customers. Sen and Lerman (2007) pointed out that worldwide spread of the internet has gave the platform to users to share their experience in ubiquitous form of eWOM. According to Mayzlin (2006) and Chatterjee (2001), eWOM has become more important than WOM due to its high reach and greater accessibility to opinion of geographically dispersed customers. Mayzlin (2006) gave an interesting example and study will use the example to highlight the importance of eWOM. Suppose, a Swedish company wants to launch a product in UK after initial launch in Sweden and customers of UK want to know about the product review before buying the product for first time. However, as the product is launching for first time in UK hence it will be difficult for UK consumers to access WOM created offline in the locality. This problem can be easily sorted out by accessing feedback of Swedish consumers via internet or social networking site and in this way; eWOM can be used to eradicate geographical barriers in product performance review. Fong and Burton (2008) stated that eWOM can be created via various internet applications such as blogs, e-mails, social networking posts, content sharing, photo sharing, online review etc. Hennig-Thurau and Walsh (2004) and Zhu and Zhang, 2010) pointed out that it might not be right to assume that eWOM can influence popularity or sales of all products but it has the capability to influence purchase decision for certain products. In such context, Zhou (2011) and Zhu and Zhang, 2010) stated that consumers evaluate the credibility of the online information shared by another individual with their cognitive processing capability. Consumers perceive eWOM or online review as trustworthy when there is an agreement between online review and their personal opinion about the product (Zhu and Zhang, 2010). Sen and Lerman (2007) also found that valence of positive eWOM versus negative eWOM can influence purchase intention of customers. 3.2 Psychological Model According to Ajzen (2001 and 2002), theory of planned behaviour (TPB) can be used to understand the decision making process of customers and role of external stimulator in influencing purchase intention of customers. Ajzen (2001, p. 28) defined TPB model as “one’s attitude toward a behaviour, coupled with prevailing subjective norms, and with perceptions of behavioural control factors, all serve to influence an individual’s intention to perform a given behaviour.” Hsu and Lin (2008) stated that information availability through internet blogging and online review helps consumers to make structured decision and their behaviour can be influenced by their disposition to secondary information. According to the TPB model, individual’s intention to perform certain task is directed by availability of motivational sources, perceived belief and attitude and subjective norms. Alam and Sayuti (2011) and Kassem et al. (2010) found that TPB model can be successfully used to understand purchase intention of customers. However, according to knowledge of the researcher, apart from research work of Jalilvand and Samiei (2012), no other researchers ever tried to understand impact of on eWOM on consumer purchase decision in context to TPB model. Hence, conducting research on juxtaposition between eWOM and TPB model would be one of its first kinds and it is expected that this research paper will encourage future researchers to shed light on the topic. Soderlund and Rosengren (2007) WOM transmission can create direct or indirect impact on attitude of consumers towards the product or service offering of companies. Ying and Chung (2007) and Castaneda, Rodriguez and Luque (2009) also found that eWOM can direct attitude and purchasing behaviour of customer with the integration of two way benefits such as, 1- customers may fear that they may lose money by buying low value product and accessing online review prior purchasing product may decrease psychological and financial fear of customers, 2- communicating with experienced users through online platform increases knowledge level of users and that may influence their attitude towards the brand. Taking help of the research works of Gruen, Osmonbekov and Czaplewski (2006), following hypothesis can be drawn; Hypothesis 1: Purchase decision of consumers can be directed by positive or negative positive eWOM towards a particular brand or product or service. Hypothesis 2: Purchase decision of consumers can be directed by information availability and high message source credibility of eWOM towards a particular brand or product or service. Hypothesis 3: Purchase decision of consumers can be directed by congruence between expected review and eWOM towards a particular brand or product or service. Hypothesis 4: Purchase decision of consumers can be directed by their motivation to meet subjective norms directed by eWOM towards a particular brand or product or service. Important thing is that, apart from the research works of Al-maghrabi, Dennis and Halliday (2011), very few researches exist that depicts role of eWOM towards purchasing intention of Saudi consumers hence the researcher will only rely on primary research to understand the difference in purchase decision of Saudis & non Saudis consumers driven by eWOM. In such context, there will not be much literature review on the above mentioned topic due to non availability of literature. Chapter 4: Theoretical Framework Independent Variable (IV) Dependent Variable (DV) Chapter 5: Research Methodology / Sample Plan Saunders, Lewis and Thornhil (2007 and 2009) stated that researchers should select proper methodology to conduct the research in order to address the all the pertinent research questions in convincing manner. On the other hand, Curwin and Slater (2008) and Creswell (2009) pointed out that there can be three types of research methodology such as qualitative methodology, quantitative methodology and mixed model. In this research paper, the researcher will use quantitative methodology to address all the research questions in measurable manner. The researcher will design close ended questionnaire consisting of 12 to 15 questions for conducting internet based survey. Argument in the literature review will be used to develop the close ended questionnaire. The research will collect the information of Saudi and Non-Saudi customers using eWOM from social networking sites. The researcher will visit online product review sites, Saudi and non-Saudi user communities in Facebook and gather the contact information of community members. Then, the researcher will use convenience sampling as part non-probabilistic sampling to select all total 500 respondents (250 Saudi consumers + 250 non-Saudi consumers) for the sample survey. Questionnaire will be e-mailed to respondents and they will be requested return back the filled up online questionnaire within specified time line. After receiving the filled up questionnaire, the researcher will use Multivariate analysis of variance (MANOVA) and Principal Component Analysis (PCA) to analyze the data. Although, primary data will be collected by doing the primary survey while secondary data will be collected by using books, printed journals, articles, company websites, news paper, magazines etc. Research findings will also be verified in context to available secondary information. Chapter 6: Significance of Research It has been already mentioned by the researcher that apart from Jalilvand and Samiei (2012), no previous researcher tried to use theory of planned behaviour (TPB) for understanding the impact of eWOM on consumer purchase decision. Hence, conducting the research on the topic would fulfil the gap in the literature regarding use of TPB in context to eWOM. Another thing is that very few researchers conducted study difference in purchasing decision driven by eWOM between Saudi and Non-Saudi customers. Hence, it is expected that findings of this research paper will put significant contribution to consumer behaviour literature in context to Saudi Arabia. Due to above mentioned reasons; the proposed research paper would be significant in context to eWOM literature. Chapter 7: Research Implication Comparing the purchase decision of Saudis & non Saudis consumers in context to eWOM would not only fulfil the gap in the literature but also might provide guideline to future researchers planning to conduct study on the topic. The findings of the study also have some empirical values such as, 1- findings of the research can be used by companies to design their digital marketing and product strategy and 2- research findings can help social media marketers to decide their search engine optimization (SEO) strategy. Business organizations can even use the findings of this research to understand the difference in purchasing decision making process between Saudi and non-Saudi customers and based on this information, they can formulate their future marketing strategy in Saudi Arabian region. Chapter 8: Timeline Year Year 1 Year 2 Year 3 Activities       Research Problem Identification       Research Proposal Preparation       Finalizing the research topic       Gathering secondary data       Completing Literature Review       Primary Data Collection       Data Analysis       Preparing final report       Revising final report       Final Research Report Submission       On the basis of above time line, it has been expected that the research will take 3 years to be completed and the researcher will try to shorten the time length of the research by conducting all the research steps in responsive manner. After getting approval on the above mentioned research proposal, the researcher will start collecting existing secondary data on the research topic in order to develop information background for the literature review. Reference List Ajzen, I., 2001. Attitudes. Annual Review of Psychology, 52(1), pp. 27-58. Ajzen, I., 2002. 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Impact of online consumer reviews on sales: The moderating role of product and consumer characteristics. Journal of Marketing, 74(2), pp. 133-14. Read More