Impact of Product Reviews on Consumer Buying Patterns in E-Commerce Sites

Topic Description

This proposed topic is about the: Impact of product review on consumer buying patterns in e-commerce sites such as Amazon. This study explores the influence of reviews about products in online shopping sites. I would like to focus this topic from a broader and wider  perspective for my future dissertation.

I also focus in addressing the future product review influences in building a relationship, effects of online word-of- mouth affect in consumer behavior and customer rating and online shopping behavior.  

For my future dissertation, I would like to organize the necessary information to formulate a clear and coherent research study with appropriate guidelines.

My research question is:

1. How effective are the product review in helping the consumer make purchase decision?

My sub-research question are:

1. Is the review influential in creating a positive view towards a company’s brand?
2. Do negative reviews alter the consumer’s loyalty towards a particular brand?
3. Do consumers buying decisions rely solely on product ratings?

Research questions and sub-research question are designed which will help me to have a framework for my research and to develop the plan of my dissertation thesis.

This research question aims in addressing the topic which is fully researchable and critically deals with topic and issue in depth. The proposed sub-research question aims in understanding various related aspects of this research proposal.

Introduction

The main purpose of this study is to identify the relationship between product reviews and how it influences the consumer buying patterns in e-commerce sites such as Amazon.

Numerous people opt to shop online because of the benefits such as comfort, accessibility to multiple choice of products, instant source of data about the products and the choice of purchasing desired products by the click of a button. Buyers can discover an item rendered by multiple sellers at competitive prices and choose the economical viable options without having to travel to different shops. (Hung, 2012).

Customers who make online purchases do not get to touch or test the products like they do in a conventional retail store. Hence their buying decisions are made on the basis of the data available on the e-commerce site. Vendors try to overcome this shortcoming by giving the customers the chance to share their experiences and assessments of the products they purchase in the form of reviews and ratings.(Do-Hyung Park, Jumin Lee and Ingoo Han, 2007)

The basic premise that examine the effect of customer reviews on product sales is that the ratings mirror consumer’s observation of the purchased product autonomous of the ratings of the others. Researchers have demonstrated that these ratings are dependent on various factors that are not related to the customer’s factual evaluation of the product. Researchers show that these ratings is influenced by already posted ratings by customers. (Moe and Trusov, 2011). It is an accepted notion that online reviews demonstrate the likelihood of a successful transaction and serves as a manual to the preferences to the choices of the consumer. (Fagerstrøm, Ghinea and Sydnes, 2016).

Reviews draw in more prepared and purchase ready consumers the rate of transformation of a visitor to a purchase ready consumer at a site with reviews could be greater and the cost to obtain such consumers is comparatively lesser to a site not offering reviews. (Ong, 2011)

Aims and Objectives

• To identify the shift in customer behavior towards a product through other customer ‘s review.
• It helps to analyze the issue affected by customer review in relation to development of the product.
• It helps to identify significance of customer services unit in building a brand relationship with the customer.
• It helps to identify in the development of a better-quality product through product reviews.
• To analyze how in building a customer relationship with the brand or product will be effective.

Justification for Research

Today’s business world is shifting towards a more innovative way of doing things and demand of online goods and services are vast increasing day by day. Firstly, I would like to study this research proposition to be clear and coherent so it would make sense to any individual those who don’t have a deep knowledge about the subject-matter of proposal.

I emphasis in focusing mainly on customer review and its influence. I consider conducting this study in India because India is a nation with diversity and Customer opinion varies depending upon factors influenced directly or indirectly.

I always wondered the difference in perception of people about everything and that is one of the main interest in coming up with this proposition. I believe to do this study at the best of my ability in to review main contents and understand the flaws in it.

There are certain limitations to this study such as:

Many products have both search and experiential properties, and consumers may respond in diverse ways to assorted products.

Role of cognitive personalization and its moderators affects the online word of mouth in passing misleading information

Confused by information overload on too many brands and stores, some customers end upbecoming indecisive

However, I think there is a great significance and deeper things to study to analyze all the related issues directly or indirectly affected.

Academic areas for research

Consumer behavioral pattern which are influenced by the product reviews from opinion leaders.

LITERATURE REVIEW

In today’s world product reviews have taken a larger role in consumer decision making. Internet is considered to be one of the large source of information available to consumer in which to seek information regarding the products and its features. The information is in-depth regarding the product which help consumer in making a decision whether to purchase a product or not.

Online reviews consist of complicated data structure which is made even more complicated by the customer’s capacity to distort the data. (Hoffman, 2004)

These review structures allow the customers to check and keep tabs on the review history of any individual reviewer and assess them on the basis on the way different customers interpret and make assessments on any given of the product review or the individual reviewer. (Hoffman, 2004)  

Effects of online word of mouth:

There are three Metrix for online word of mouth which are identified in this area:

• Valence
• Variance and
• Volume   

Valence is represented most frequently by an average rating measure. It has also been represented by some measure of positivity of ratings. The variance in ratings has also been measured in a variety of ways. The volume is represented most commonly by the number of postings.

The application of these three Metrix can be done in product performance and related areas as well. (Hoffman, 2004)

Many research study suggests that variance and volume of online word of mouth has significant effects in consumers purchase behavior. (Hoffman, 2004)

Online suggestions and reviews have become valuable source of data for consumers. With regards to online shopping, it is challenging for the consumer to assess the products and its value. Consumers have an inclination to depend on other consumer’s review’s or recommendations or ratings about a particular product so in essence they depend on the judgement of other consumers and their experience using the products. This differential method of providing reviews and ratings through online blogs, forums and communities is called as Electronic word of mouth.(Hyrynsalmi et al., 2015)

A study on the modulating role of social influence theory, Lee, Shi, Cheung, Lim and Sia, (2011) found that a positive social impact can reinforce the connection between the customer mentality towards online shopping and the desire to shop. Research by Park and Cho (2012) on indicated a positive relationship between consumer decision to involve in online community and their habit to find data. This behaviour is a result of the psychological affinity for the community.(Goswami and Khan, 2015)

This section presents a summary of studies on the method by which customers find data in e-commerce sites.  The internet is loaded with multitude of data which the customers can find and make assessments based on this data about the products. Studies have been undertaken to determine how various sources of data such as reviews on products, reviews by customers, reviews by vendors and reviews on third party website effect the customers purchase behaviour.(Hoffman, 2004)

Consumer ratings and online shopping behavior

Many studies in past have found that posted online ratings exhibit systemic patterns over the period of time. In particular, valence rating trend to shows a downward trend this is due to the process of product life cycle (Hoffman, 2004). Consumer who buys at an early stage of product life cycle tend to have significant taste and preferences. However, the taste of preferences of initial customer changes in comparison to later customer.  (Hoffman, 2004). This will show a downward trend due to decreasing ability of the future demand. (Hoffman, 2004)

     “Online ratings and reviews tend to regulate the consumer’s decision regarding whether or not to purchase a particular product. Furthermore, sample studies indicate that positive reviews boost sales and the impacts rely upon the Volume and Valence of the reviews and ratings”

(Hyrynsalmi et al., 2015)

Customer search methods can be divided into two types

1. Goal directed search Behavior
2. Exploratory search Behavior (HoEun Chung and JungKun Park, 2009)

The quality of Goal directed search places emphasis on a customer having a particular requirement for buying. Meanwhile Exploratory search is not planned and is predominantly based on an impulse. Unique qualities of Goal directed search category of customers consider shopping as an undertaking that is duty oriented and their behavior is conditioned towards a goal of swift purchase which is systematic and intended. Whereas Exploratory search category of customers preoccupy themselves with exploratory and directionless browsing without any intention of buying.  (HoEun Chung and JungKun Park, 2009)

PERSONALIZATION

It is described as the manner in which the customers or the target audience make sense of the reviews and make assessments about the products that are reviewed about. (Xia and Bechwati, 2008).  Cognitive Personalization in Online Customer Reviews originates from the targeted customer and triggered by  external forces (Xia and Bechwati, 2008)

The purpose of personalization is to increase the element’s personal relevance to an individual. The  Customers identify customized offers as in alignment with their needs, hence has a cumulative effect on their buying decisions  (Xia and Bechwati, 2008). When the consumer reads such review they tend to evaluate the data in a personalized way , they tend to view the text may as reliable, genuine and authentic. (Xia and Bechwati, 2008). Hence cognitive personalization tend to affect the consumers purchase attitude towards the product positively. (Xia and Bechwati, 2008).

IMPACT OF POSITIVE AND NEGATIVE REVIEWS

Consumer always wants best information available to them about a product or services. here, positive and negative review plays a vital role in decision making. Firstly, both positive and negative review is like two sides of a coin. Consumer after utilization of a product or services tend to provide opinion to future users of a product and services. The positive review will always give positive remarks to the manufacturer of the product. However, this is not in the case of a negative review. The negative review draws more attention that a positive review. (Xia and Bechwati, 2008)

Generally, human beings have a natural tendency to judge of the negative aspect of the things more consciously. The online review is very vital for a product or service due to its close interaction and more evolvement through online referring sites. In the case of, online review, each feedback plays a pivotal role in the process of decision making. The decision making of consumer is directly related to the product success or failure (Xia and Bechwati, 2008). In general context. Positive review is as confirmation from another user which gives guarantee in utilizing the product. Nowadays, people are very intelligent when it comes in purchasing of a product or services. They understand the persuasive world of marketing technique around them. This enables them to seek right product review information from the previous users of product or services (Xia and Bechwati, 2008).

Critical Analysis of a Peer Reviewed Scholarly Text

The Effect of On-Line Consumer Reviews on Consumer Purchasing Intention: The ModeratingRole of Involvement

Do-Hyung Park, Jumin Lee, and Ingoo Han

Do-Hyung, P, Jumin, L, & Ingoo, H 2007, ‘The Effect of On-Line Consumer Reviews on Consumer Purchasing Intention: The Moderating Role of Involvement’, International Journal of Electronic Commerce, 11, 4, pp. 125-148, Business Source Premier, EBSCOhost, viewed 22 April 2017.

What is the primary focus of this study? Is this study relevant to my chosen topic?

The primary focus of my dissertation thesis is to gauge the effect of online product reviews on consumer behavior in ecommerce sites such as Amazon. And to gauge whether or not the reviews effect brand loyalty during purchase decisions. An important question this text seeks to answer is if the consumer’s purchasing decision is influenced by the increase in the number of reviews. Thus, this text gives me a direction towards conducting a research study.

What is the purpose of this study and what kind of approach does this study undertake?

This literature is a research study conducted by Do-Hyung Park, Jumin lee, and Ingoo Han to study the effect of online reviews on consumer purchasing intentionpublished by the International Journal of electronic commerce.

What direction of research have the authors taken for this research?

The Authors have undertaken a knowledge – for understanding project.

Does this study answer all the pertinent research questions?

The authors have undertaken this study to investigate the underlying mechanism by which reviews affect purchasing intentions.

What kind of approach to theory does this study take?

The investigation is informed by practical theory.

What impact do the target group have on this study?

The target audience offer recommendations for action.

What sort of claims do the authors attempt to answer by this study?

Research and Practical knowledge.

Do the authors offer substantial information with clarity?

The authors are clear with their approach in terms of development and implementation of the various tools assigned to conduct this study. They have illustrated the methodology and findings with the help of tables and graph. They have succeeded in offering ample information for this study in the introduction and the conclusion with clarity.

Are the authors convincing with their research findings?

The authors make their claims by evidence and by acknowledging that there are certain limitations to their study.

Are the claims of the research study specific and is it contextual?

The author’s claims are similar context, universal and cultural.

Is the finding supported with proper evidence and what type of sources are used?

The authors back their claims on the basis of the author’s own practice knowledge or research and literature about others practice knowledge and research.

Are the findings backed up by credible information source and analysis?

The range of sources are credible and adequate. The sample size is 370 and there is a detailed account of the information regarding data collection and analysis.

Are the findings of this study relevant to my proposed research?

The claims seem to be consistent with my personal experiences as an online shopper.

Does my analysis of this study help in addressing questions that I have formulated for my research? Are the findings of this study compelling?

The authors have provided clear data with detailed accounts in every aspect of their study including the foundations of the theories the study is based on, research methodology and procedure involved. They have illustrated the findings with the help of tables and graph for clarity.

Could the authors have supported their study with a more compelling evidence?

The authors could have focused more on alleviating the limitations involved during data collection.

BIBLIOGRAPHY

Do-Hyung Park, Jumin Lee and Ingoo Han (2007) ‘The Effect of On-Line Consumer Reviews on Consumer Purchasing Intention: The Moderating Role of Involvement’, International Journal of Electronic Commerce, 11(4), pp. 125–148. doi: 10.2753/JEC1086-4415110405.

Fagerstrøm, A., Ghinea, G. and Sydnes, L. (2016) ‘Understanding the Impact of Online Reviews on Customer Choice: A Probability Discounting Approach’, Psychology & Marketing, 33(2), pp. 125–134. doi: 10.1002/mar.20859.

Goswami, S. and Khan, S. (2015) ‘Impact of Consumer Decision-making Styles on Online Apparel Consumption in India’, Vision (09722629), 19(4), pp. 303–311. doi: 10.1177/0972262915610853.

HoEun Chung and JungKun Park (2009) ‘A Role of Referring Website on Online Shopping Behavior’, Advances in Consumer Research, 36, pp. 850–851. Available at: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=43008989&site=eds-live (Accessed: 22 April 2017).

Hoffman, D. L. (2004) ‘The Impact on Preferences of Consumer Access to Information In Online Shopping Environments’, Advances in Consumer Research, 31(1), pp. 530–534. Available at: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=14926330&site=ehost-live (Accessed: 22 April 2017).

Hung, L.-P. (2012) ‘Discovering patterns of online purchasing behaviour and a new-product-launch strategy’, Expert Systems, 29(4), pp. 411–425. doi: 10.1111/j.1468-0394.2011.00613.x.

Hyrynsalmi, S., Seppänen, M., Aarikka-Stenroos, L., Suominen, A., Järveläinen, J. and Harkke, V. (2015) ‘Busting Myths of Electronic Word of Mouth: The Relationship between Customer Ratings and the Sales of Mobile Applications’, Journal of Theoretical & Applied Electronic Commerce Research, 10(2), pp. 1–18. doi: 10.4067/S0718-18762015000200002.

Moe, W. W. and Trusov, M. (2011) ‘The Value of Social Dynamics in Online Product Ratings Forums’, Journal of Marketing Research (JMR), 48(3), pp. 444–456. doi: 10.1509/jmkr.48.3.444.

Ong, B. S. (2011) ‘Online Shopper Reviews: Ramifications for Promotion and Website Utility’, Journal of Promotion Management, 17(3), pp. 327–344. doi: 10.1080/10496491.2011.597304.

Xia, L. and Bechwati, N. N. (2008) ‘Word of Mouse: The Role of Cognitive Personalization in Online Consumer Reviews’, Journal of Interactive Advertising, 9(1), pp. 108–128. Available at: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=35493396&site=ehost-live (Accessed: 22 April 2017).