The Role of Intensity, Credibility, Homophilous Source, and Valence on eWOM in the Course of...

The Role of Intensity, Credibility,

Homophilous Source, and Valence on eWOM in the

Course of Intention to Purchase Cosmetic Products

on Instagram

Prepared by:Putri Amandhari

14/372725/PEK/19520

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THESIS DEFENSE

Supervisor: Prof. Basu Swastha Dharmmesta, MBA., Ph.D

Introduction

e-marketer.com (2014) on “Consumers Read More Local Online Reviews—Thanks to Rumors of Fakes?”

Internet penetration leads into fast forward communication

“..consumer still read more online reviews before putting trust on their purchasing stage”

To Gain, Interact and Receive in real time

Based on Jejak Pendapat (JAKPAT) Instagram Sellers Behavior in Indonesia – Survey Report 2015, Beauty products, cosmetics and pharmacies shows within 10.82% ranked #2 after fashion products (52.51%).

The Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

e-commerce or purchasing via Internet is one of the most rapidly growing forms of shopping (Levy and Weitz, 2001).

Online review Effectiveness -> eWOM -> Purchase Intention

Research Questions1) Does the role of intensity on eWOM-Effect affects consumer’s cosmetic

purchase intention on Instagram?

2) Does the role of perceived credibility on eWOM-Effect affects consumer’s cosmetic purchase intention on Instagram?

3) Does the role of homophilous source on eWOM-Effect affects consumer’s cosmetic purchase intention on Instagram?

4) Does the role of negative valence on eWOM-Effect affects consumer’s cosmetic purchase intention on Instagram?

5) Does the role of subjective norms moderate the relationship among eWOM-Effect; through intensity, credibility, susceptibility, valence with intention to purchase cosmetic products on Instagram?

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Research Objective

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1)To identify the characteristics of Instagram’s female consumer in buying cosmetics products on Instagram.

2)To identify which roles of intensity, credibility, susceptibility and valence on eWOM-Effect in which more preferable and could affects intention to purchase cosmetic products on Instagram.

3)To identify does the role of subjective norms moderate the relationship between eWOM-Effect; through intensity, credibility, susceptibility, valence and which affect the most on intention to purchase cosmetic products on Instagram.

E-WOM, E-commerce, Social Shopping and

UGC

…Businesses are actively exploring new methods to combine the power of social networking with online and offline sales. (Shen, 2012). User Generated Content (UGC) or UGC refers to any own created material uploaded to the Internet by non–media and it has a greater influence on people’s consumption (Bahtar and Muda 2016: 338) 5

Instagram: Features and Functions

….Brand community comes alive where past and present customers will share their reviews or experience on comment sections and future customers will make their research based on the reviews that they read (Latiff and Safiee, 2015).

Theory of Planned Behavior: Subjective norms

-According to TPB, an individual’s performance of a certain behavior is determined by his or her intent to perform that behavior.

According to Ajzen (2016), subjective norm is the perception of social pressures to undertake or not to undertake a given behavior.

Literature ReviewThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram


Operational Definition

Goyette et al. (2010) measured the WOM intensity through eWOM activity, volume, and dispersion.

intensity

Park and Lee (2009) examined that negative eWOM is greater than positive eWOM in the course of influencing consumer’s information on purchase decisions.

NEGATIVE VALENCE

Homophile is based on the degree which consumers exhibit similarities with regard to certain attributes, such as age, sex and lifestyle (Rogers, 1983 in Steffes and Burgee, 2009).

HOMOPHILOUS SOURCE

Goldsmith et al. (2000) defined that expertise and trustworthiness have generally been considered sub-dimensions of perceived credibility.

PERCEIVEDCREDIBILITY


Operational Definition

Subjective norms refer to consumer’s perception of whether other people in their society want them to display a particular behavior (Ajzen, 2016)

SUBJECTIVE NORMS

Purchase intention referred to the extent to which a consumer wants to purchase products.

INTENTION TO PURCHASE

H1. Intensity as in eWOM-Effect has positive impact on intention to purchase.

H2. Perceived credibility as in eWOM-Effect has positive impact on intention to purchase.

H3. Homophilous source information as in eWOM- Effect has positive impact on intention to purchase.

H4. Negative valence as in eWOM-Effect has positive impact on intention to purchase.

Hypotheses The Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

H5a. Subjective norms moderate the relationship within intensity and intention to purchase. H5b. Subjective norms moderate the relationship within perceived credibility and intention to purchase H5c. Subjective norms moderate the relationship within homophilous source and intention to purchase. H5d. Subjective norms moderate the relationship within negative valence and intention to purchase.

Hypotheses The Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

Research Scheme

eWOM Effect

Intensity

Perceived Credibility

Homophilous Source

Negative Valence

Intention to Purchase

Subjective Norms

H1 (+)

H2 (+)

H3 (+)

H4 (+)H5a (+) H5b (+) H5c (+) H5d (+)

Modified from Cheung, C. and Thadani, D. (2012), “The Impact of Electronic Word-of-Mouth Communication: A Literature Analysis and Integrative Model,” Decision Support Systems, Vol.54, No.1, pp.461-470. And Jalilvand, M.R. and Samiei, N. (2012),"The Impact of Electronic Word of

Mouth on a Tourism Destination Choice: Testing the Theory of Planned Behavior (TPB).” Internet Research, Vol.22, No.5, pp.591-612.


Research Design, Population and Sample

Research Design: Quantitative with survey method to explore the fact with precise interpretation points of view in order to find a systematical picture of accurate facts.

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Population and Sample: 1)Female 2)Age 20 to 30 years old

Sampling Design:1) who have Instagram account, 2)use Instagram as reference points in gaining information about cosmetics and beauty products, 3)but never purchase cosmetics and beauty products on the online shop in Instagram.

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Pre TestThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

KMO= 0.738, Indicates good partial correlation exhibited in the data for this study. The Bartlett’s test of Sphericity result is 0.000, which means very significant.

Coefficient Cronbach’s Alpha of each variable in this research is bigger than critical value 0.70.

57 respondents for pretest that held on July 15 th, 2016 until 19th July 2016.

Research Analysis

Classic Assumption Test Normality Test

Multicollinearity Test

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Hypothesis TestingMultiple Regression Analysis

Moderated Regression Analysis

t- test

F –test

Coefficient of determination (R2)

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Validity and Reliability Test (1st iteration)


KMO = 0.833MSA exceed 0.50, this indicates good partial correlation exhibited in the data for this study. The Bartlett’s test of Sphericity result is 0.000, which means very significant.

210 respondents to find validity and reliability on the big sample.

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Validity and Reliability Test (2nd iteration)


Indicates good partial correlation exhibited in the data for this study. The Bartlett’s test of Sphericity result is 0.000, which means very significant.

Coefficient Cronbach’s Alpha of each variable in this research is bigger than critical value 0.70.

210 respondents to find validity and reliability on the big sample.

The results shown that all the independent variables in this research have VIF < 10

Means there are No Multicollinearity for each variables

Classic Assumption TestThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

If significance numbers of Kolmogorov Smirnov test any value above 0.5, means that it is normally distributed.

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Hypothesis Testing (Multiple Regression)

44.8% variance in purchase intention is explained by intensity, perceived credibility, homophilous source, and negative valence, with the rest 55.2% were explained by other variables that are not involved in the model.

Based on those values, it can be concluded that the homophilous source is not significant (p=0.091>0.050). And also since effect of perceived credibility has the highest beta value ( =0.310)β , means that credibility has the biggest influences on consumer’s intention to purchase compared to other variables.

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Hypothesis Testing (Moderated Regression)

Within range from 19.6% to 32.6% variance in purchase intention is explained by moderation effect of subjective norms on intensity, perceived credibility, homophilous source and negative valence.

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Effect of subjective norms on negative valence has the highest beta value ( =1.614), means that β subjective norms have the strongest effect on negative valence and consumer’s intention to purchase compared to other variables.

Hypothesis Beta (β) Sig. Status

H1Intensity as in eWOM-Effect has

a positive impact on intention to

purchase.

0.232 0.000

H1 Accepted In line with existing research by

Goyette et al (2010)

H2Perceived credibility as in

eWOM-Effect has a positive

impact on intention to purchase.

0.301 0.000


Harmon and Coney (1982)

H3Homophilous source information

as in eWOM-Effect has a positive

impact on intention to purchase.

0.098 0.091

H3 Not Accepted Contrast with existing research by

Brown and Reign (1982) in Cheng and Zhou (2010)

H4

Negative Valence as in eWOM-

Effect has a positive impact on

intention to purchase.

0.301 0.000


Park and Lee (2009)

Summary of Hypothesis Testing ResultThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

Hypothesis Beta (β) Sig. Status

H5a

Subjective norms moderate the

relationship between intensity and

intention to purchase.

1.142 0.005

H5a Accepted In line as extension of existing

research by Thoumrungroje (2014)

H5b

Subjective norms moderate the relationship between perceived credibility and intention to purchase.

0.918 0.018

H5b Accepted In line as extension of existing

research by Cheng and Zhou (2010)

H5c


relationship between homophilous

source and intention to purchase

1.550 0.000

H5c Accepted In line with existing research by

Ma et al (2009)

H5d


relationship between valence and

intention to purchase

1.614 0.000

H5d Accepted In line as extension of existing

research by Mazzarol (2007)

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H1. Intensity is found to have significant influence on consumer’s intention to purchase beauty and cosmetics products on the online shop in Instagram.

H2. Perceived credibility is found to have significant influence on consumer’s intention to purchase beauty of cosmetics products on online shop in Instagram.

H3. Homophilous source is found to have no significant influence on consumer’s intention to purchase beauty of cosmetics products on online shop in Instagram.

1 The more intense information that consumer seen, read or perceived, the more consumer intend to purchase the products.

2 Consumer believe of receiving information from someone they trust or from the expertise that consumer believe could deliver non harmful and the truthful information.

3 Consumers realized that everyone could write anything about their comments or opinion on Instagram comment section without any matter doesn’t necessarily determine consumer intention to purchase cosmetics and beauty products on the online shop in Instagram.


Conclusions

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H4. Negative valence is found to have significant influence on consumer’s intention to purchase beauty of cosmetics products on online shop in Instagram.

H5. This study concludes that other’s consumers opinions matter in any levels on eWOM-Effect, especially on consumer pre-purchase stage toward intention to purchase.

4. Richer information about the quality or consumer perception in a real condition. It could give more ways of agreeing and disagreeing the information that helps consumer to form their perspective on intention to purchase.

5. Others’ opinion matter because the basic purpose of using social media that are basically to share information and to present what other’s likes or wants.


Conclusions

1) Coefficient of determination (Adjusted R2) configured from the research model in moderated relationship between independent and dependent variables is relatively low.

1) As this study only focuses on one-sided gender.

1) This study is a snapshot of consumer behavior on Instagram, specifically on Instagram’s comments. This implies that it is only limited to comment on the online shop Instagram and exclude any other medium happening nowadays.

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Limitation of the StudyThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

1) Further study is needed to include additional variables outside the variables in this research to examine deeper about consumer online purchase intention of cosmetics or beauty products.

2) Focusing on two-sided gender of male and female.

3) Applying consumer’s online behavior using preference by including the all social networking sites (e.g. Facebook, Twitter, Pinterest, Youtube etc.) could give more generalized idea about the effectiveness of eWOM through some medium.

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RecommendationsThe Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on Instagram

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- THANKYOU -

Putri Amandhari 2016 x


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Lee, J.; Park, D. H.; and Han, I. (2008), “The Effect of Negative Online Consumer Reviews on Product Attitude: An Information Processing View,” Electronic Commerce Research and Applications, Vol.7, No.3, pp.341. Levy, M. and Weitz, B. (2001). Retailing Management, 4th ed., New York: McGraw-Hill. Ling, K.; Chai, L.; and Piew, T. (2010), “The Effects of Shopping Orientations, Online Trust and Prior Online Purchase Experience toward Customers’ Online Purchase Intention,” International Business Research, Vol.3, No.3, pp.63-76. Lowe, R. (2012), “Nearly Half of Consumers to be ‘Social Shoppers’ by 2021,” Available at: www.newsroom.barclays.com/Press-releases/Nearly-half-ofconsumers-to-besocial-shoppers-by-2021-8da.aspx, accessed February 20, 2016. Ma, L.; Krishnan, R.; and Montgomery, A. (2015), “Latent Homophily or Social Influence? An Empirical Analysis of Purchase Within a Social Network,” Management Science, Vol.61. No. 2, pp.454-473. Mazzarol, T.; Sweeney, J. C.; and Soutar, G.N. (2007), “Conceptualizing word-of-mouth activity, triggers and conditions,” European Journal of Marketing, Vol.41, No.11/12, pp.1475-94. Mudambi, S. M. and Schuff, D. (2010), “What Makes a Helpful Online Review? A Study of Customer Reviews on Amazon.com,” MIS Quarterly, Vol.34, No.1, pp.185-200. Olbrich, R. and Holsing, C. (2012), “Modeling Consumer Purchasing Behavior in Social Shopping Communities with Clickstream Data,” International Journal Of Electronic Commerce. Vol.16, No.2, pp.15- 40. Park, C. and Lee, T. M. (2009), “Information Direction, Website Reputation and e-WOM Effect: A Moderating Role of Product Type,” Journal of Business Research. Vol.62, No.1, pp.61–67. Qiu, P. and Lim (2012), “Effects of Conflicting Aggregated Rating on eWOM Review Credibility and Diagnositicity: The Moderating Role of Review Valence,” Decision Support System, Vol. 54, pp.631-643. Sekaran, U. and Bougie, R. (2016). Research Methods For Business: A Skill-Building Approach, 7th ed., New York: John Wiley and Sons, Inc.

Shen, J. (2012). “Social Comparison, Social Presence, and Enjoyment In The Acceptance of Social Shopping Websites,” Journal of Electronic Commerce Research, Vol.13, No.3, pp.198-212. Shukla, P. (2011), “Impact of Interpersonal Influences, Brand Origin and Brand Image on Luxury Purchase Intentions: Measuring Interfunctional Interactions and A Cross-National Comparison,” Journal of World Business, Vol. 46, No.2, pp.230-250.

Steffes, E. and Burgee, L. E. (2009), “Social Ties and Online Word of Mouth,” Internet Research, Vol.19. No.1, pp.42-59. Stephen, A. T. and Toubia, O. (2010), “Deriving Value From Social Commerce Networks,” Journal of Marketing Research, Vol.42, No.2, pp.215–228. Swidi, A. K.; Behjati, S.; and Shahzad, A. (2012), “Antecedents of Online Purchasing Intention among MBA Students: The Case of University Utara Malaysia Using the Partial Least Squares Approach,” International Journal of Business and Management, Vol.7, No.15, pp.35-49. Thoumrungroje, A. (2014). “The Influence of Social Media Intensity and EWOM on Conspicuous Consumption,” Procedia - Social and Behavioral Sciences, No.148, pp.7-15. Yuen, J. (2014), “Targeting Indonesia's Female Shoppers – Prime Products and Channels,” Available at: http://economists-pick-research.hktdc.com/business-news/article/Research-Articles/Targeting-Indonesia-s-female-shoppers-prime-products-and-channels/rp/en/1/1X000000/1X09WODN.htm, accessed July 20, 2016. Zikmund, W.G. (2003). Business Research Methods, 7th ed., Mason, OH: Thomson/South-Western.

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END OF THE PRESENTATION

Putri Amandhari 2016 x


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All relevant factors of the four major elements of eWOM communication.

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Research Questionnaire

The Role of Intensity, Credibility, Homophilous Source, and Valence on eWOM in the Course of...

Business

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