How Do Online Reviews of Products or Services Affect Other Customer’s Opinions?
Georgia Coleman
Towson University
Abstract
The introduction of technology in daily lives has given many companies the opportunity to grow their business on the Internet. The expansion has also allowed consumers to give their opinion on services or products. Online review sites such as Yelp, Amazon, and TripAdvisor give past, current, and potential customers the opportunity to read and write reviews that are accessible to many. Reviews can shape a buyer’s attitude toward a company. Many people depend on customer reviews before buying a product or using a new service, so it is vital that customers can trust the reviews available online. Online reviews are effective in the influence of buying habits and will continue to do so in this new era of widespread technology use. Researchers are actively studying the influence that customer rating sites have on online products and services.
How Do Online Reviews of Products or Services Affect Other Customer’s Opinions?
Online customer reviews are the foundation of positive user communication. They give consumers the opportunity to get feedback from experienced buyers on a product or service. Online reviews are a good marketing technique because it allows companies to broaden their number of customers and receive a good name for their company. Reviews also give companies the opportunity to respond to reviews that can advise the company on how to improve the customer experience.
Reviews are crucial because they are how a consumer perceives the company. It is the first impression that is not in control of the company itself but in past customers. When consumers see a positive review, they can trust that the company can fulfill whatever needs that they have. When consumers see negative reviews, they become aware of the risk that may come with buying from a company. Potential buyers can have an opinion on a product or service simply by looking at online reviews.
Definition of Topic
The foundation of online review site starts with the idea of online communication. Electronic word of mouth, or eWOM, is a statement made about a product or company by a former, current, or prospective customer. The statement is available to a large audience via the Internet (Dahlgaard-Park, 2015). The communication can occur between company owners and customers and between customers themselves. Electronic word of mouth is an essential marketing tool for businesses. The three parts of eWOM are the sender, message, and receiver. With positive eWOM, a company will see it as a benefit; whereas, negative eWOM can seriously hurt a company and damage its reputation (Dahlgaard-Park, 2015).
The actual term that relates to what users put on the internet is user-produced content. User produced-content, or user-generated content (UGC), refers to the emergence of a new media product that was made available due to the Internet revolution. UGC includes elements ranging from product reviews to a tweet on Twitter to operating a YouTube channel (Zimmer, 2015). The main element of UGC is that anyone can use technology to produce their own content and distribute it across the Internet. Online reviews fit into the category of content on the web that is available to a wide audience. Users that produce content find a motivation to do so not for their own benefit, but for the benefit of other users. This drives the reason that online reviews should be trusted and can influence the way purchase attitude (Zimmer, 2015).
Humans make daily decisions on issues they deem necessary for life. Consumer behavior is the study of factors associated with the purchase, use, and disposal of products or services. Research on consumer behavior can contribute to marketing communication and increase the efficiency of certain companies. An online review can control consumer behavior due to humans naturally wanting to know if a product is right for them or worth their money (Haugtvedt, 2007).
Background of Topic
Online reviews became prominent with the company Epinions, which was founded in 1999. Epinions started the trend of websites based on user-generated content, such as Amazon, eBay, and YouTube. Although Epinions is no longer an operating company, it set the bar for many online review sites that exist today (Goldman, 2014).
The concept of online reviews became more popular in the early twenty-first century. Yelp, one of the leading online reviews service, was founded in 2004 and quickly grew as a company by the year 2010. With many emerging online review websites, the concept and influence of electronic word of mouth have become prominent and important with companies (Mirikitani, 2015). According to the Pew Research Center, 82% of adults from the US sometime read online reviews with 40% saying they always or almost always read reviews (Smith & Anderson, 2016). Researchers are conducting studies to investigate the influence that online rating sites have on customers and how they affect businesses and service.
Discussion of Research
Many research studies have been performed involving online reviews and their effects on consumers and companies. Researchers Weissten, Song, Andersen, and Zhu (2017) investigated the impacts that negative online reviews have on the purchase intention of a consumer. The study was a quantitative study with hypotheses. The first hypothesis predicted that when a consumer with a purchase goal is presented with a low proportion of negative reviews, there will be a higher purchase intention and satisfaction with the price. The next hypothesis stated that when a consumer with a purchase goal is presented with a high proportion of negative reviews, there will be a weaker purchase intention and satisfaction with the price (Weissten, Song, Andersen & Zhu, 2017). Purchase goal means that one intends to purchase and the one without a goal does not need the product but is looking. The participants of the study were 112 undergraduate students from Southwestern University in Texas. Of the 112, 51% were female and 49% were male. Headphones served as the test product along with with eight reviews for the participants to read. Half of the participants were assigned two negative reviews out of eight while the other half was assigned four negative reviews out of eight. In order to collect data, participants responded to a 7-point Likert scale about price satisfaction, perceived value of the headphones, and purchase intention (Weissten et al., 2017).
The results of the study show that if a product has a low proportion of negative ratings, a consumer with a purchase goal has a higher price satisfaction and purchase intention than a consumer without a purchase goal. The lower a proportion of negative reviews confirms to potential buyers that most consumers have had a good experience with the product. For a product with a high proportion of negative reviews and a consumer with a purchase goal, they are more likely to be dissatisfied with the price and reduce their purchase intention. A higher risk is seen with products that have more negative reviews (Weissten et al., 2017).
With the conclusion of the study, the researchers suggest that companies should pay close attention to negative reviews and immediately respond to them, as potential buyers will see this. A customer will give more regard to a company if they see a response rather than the negative review alone. The researchers suggest that more research needs to be done on neutral reviews. Also, another study should be done with a higher number of reviews. Two negative reviews out of eight have a bigger effect than 200 negative reviews out of 800 (Weissten et al., 2017).
Another quantitative study that produced similar results was conducted in South Korea. Researchers Lee, Park, and Han (2008) studied the effects that reviews have on consumer product attitude. The study focused on how negative reviews, a customer’s product involvement, and the quality of the review could all be factors contributing to customer attitude and interest in the product (Lee, Park & Han, 2008). The researchers hypothesized that as the proportion of negative reviews increases, the product attitude is less favorable. They also proposed that high quality and well-written reviews influence high involvement customers more than customers with low involvement in the product (Lee et al., 2008).
The participants of the study consisted of 248 college students with 95.5% of them having prior experience with online shopping. The mock product in the experiment was an MP3 player. After visiting the virtual shopping mall and viewing the MP3 player, participants answered questions that tested their level of product involvement and used a seven-point scale to answer questions after reading the reviews (Lee et al., 2008). The results of the study show that consumers conform to online reviews. The products with a higher proportion of negative reviews produce an unfavorable attitude of that product. Also, a high-quality negative review has more influence than low-quality negative reviews because they are trustworthy and can persuade the consumer. The quality of a review is measured by factors such as credibility, length, and sufficiency (Lee et al., 2008). The high-quality review has more of an effect on consumers with high product involvement. Consumers who have low product involvement are not affected by the quality of the review. Negative reviews influence the attitude of both high and low involvement consumers. The study shows that consumer behavior is affected by negative reviews that can impact a product and potential future customers (Lee et al., 2008). [[Okay, but what does all this mean in terms of people purchasing the products? What are business responses to the product reviews?]]
The researchers suggest that companies manage their negative reviews due to the high impact of them and the potential money that can be lost because of them. With limitations, the researchers noticed that negative reviews are more credible than positive reviews. Research should be done to discuss the credibility factor. There is also a limit to the study due to the small number of reviews (Lee et al., 2008).
Another research study was done on the effects that electronic word of mouth have on consumer choice of product and intent to buy. Researchers Gupta and Harris (2010) completed this quantitative study with the intent of [ADD SOMETHING]. An online shopping environment was created and participants had to choose a laptop out of ten options (Gupta & Harris, 2010). The researchers hypothesized that when an e-WOM recommendation is present and as the number of those recommendations increases, the amount of time spent searching and considering product choices increases. The time spent searching and considering product choices increases as a customer’s willingness to process information increases. The participants of the study consisted of 198 students enrolled in an introductory marketing course at a large southern university in the United States. The average age was 21 with 56% female and 44% male (Gupta & Harris, 2010).
An initial online questionnaire was given to participants that calculated their motivation to process information. The participants then picked a laptop and took another questionnaire. The program that the experiment used tracked the laptop choice, sequence of visited pages, and time that was spent on each page (Gupta & Harris, 2010).
The findings of the study show that e-WOM has a significant effect on time spent on product search and consideration. Need-for-cognition increases as time spent on search and consideration increases. Total search increases with the presence of multiple e-WOM recommendations for higher NFC respondent than low respondents (Gupta & Harris, 2010). E-WOM strength online positively impacts overall search and consideration of high NFC respondents. The big picture is that e-WOM recommendations lead to more time spent on analyzing information. This occurs for the consumers that are highly motivated to process information (Gupta & Harris, 2010). People with less motivation to process information are willing to make sub-optimal decisions based on e-WOM recommendation. The researchers suggest that due to the influence that e-WOM has on customers, companies should put in mechanisms that ensure that people giving online reviews are actual past users of their product or service (Gupta & Harris, 2010).
Another study by researchers Bambauer-Sachse and Mangold (2013) took another angle with regards to reviews. The researchers wanted to do a study on the effects that reviews have on customers when there is a knowledge that manipulated reviews exist. They wanted to prove how an attitude based on reviews of products could change if consumers knew of manipulative tactics (Bambauer-Sachse & Mangold, 2013). [[The major hypothesis for the study was that negative effects of negative reviews on product evaluations are weaker if consumers know that such reviews can be manipulated than in the case where consumers do not have this knowledge. Such a knowledge effect does not exist for positive reviews.]] (Paraphrase prior sentence) (Bambauer-Sachse & Mangold, 2013).
The participants were 211 students and university members from the University of Fribourg in Switzerland. There were 49 % women, 51% male, and the average age was 27.7. To conduct the research, participants were assigned to four different groups: 3 positive reviews, 2 positives and 1 negative, 2 negatives and 1 positive, and 3 negative reviews. The participants were told to imagine that they needed a mobile phone and were given a technical description of the product (Bambauer-Sachse & Mangold, 2013). The participants gave an “initial product evaluation”. After being assigned to a group, the participants read their assigned reviews and completed a product evaluation for the second time. They were also asked “to rate items that measured their knowledge about the fact that reviews can be manipulated.” Statistics were created based on these results (Bambauer-Sachse & Mangold, 2013).
Due to the four groups of review types (positive and negative), there were different findings for each. For the positive reviews, there is not much of a change of the two product reviews that the participants submitted when aware that review manipulation may occur. However, when there is one negative and two positive reviews and there is a knowledge that manipulation may occur, the effect on the product evaluation is positive (Bambauer-Sachse & Mangold, 2013). If there is no knowledge that manipulation may occur, the effect on the product evaluation is negative. When the negative reviews are the majority and there is no knowledge of product manipulation, the product evaluation is negative. However, with knowledge of manipulation, the effect of the negative reviews is weaker on the product evaluation (Bambauer-Sachse & Mangold, 2013). The study showed that the effects that negative reviews may have on a consumer are reduced when they are aware of “manipulative tactics”. The researchers suggest that companies should have a news release of their website to expand the knowledge review manipulation to consumers. This is vital since negative reviews and knowledge of manipulation have less detrimental effects on consumers (Bambauer-Sachse & Mangold, 2013).
Conclusion
Companies depend on a good reputation in order to grow their business. An honest review from past customers is one of the most credible sources of information that a potential customer can receive. Online reviews hold a power that can make or break a company. Research shows that when a customer is interested in a product or service and is willing to process information regarding it, online reviews have a large impact on consumer decision. The research studies occurred in various parts of the world, yet produced similar results. Online reviews will influence a buyer’s decision and companies should take the necessary measures to ensure that they are not damaged by negative reviews. Reviews should serve as recommendations and critiques on how a company can do better. About everyone who is willing to try a new product or service will look to an online review for reassurance. The influence of online reviews continues to grow as the use of technology becomes more evident in daily lives.
References
Bambauer-Sachse, S. & Mangold, S. (2013). Do consumers still believe what is said in online product reviews? A persuasion knowledge approach. Journal of Retailing and Consumer Services, 20(4), 373-381. doi: 10.1016/j.jretconser.2013.03.0044
Dahlgaard-Park, S. (2015). Electronic word of mouth. In The Sage encyclopedia of quality and the service economy (Vol. 1, pp. 179-181). Thousand Oaks, CA: SAGE Publications, Inc. doi: 10.4135/9781483346366.n56
Goldman, E. (2014). Epinions, the path-breaking website, is dead. Some lessons it taught us. Retrieved from https://www.forbes.com/sites/ericgoldman/2014/03/12/epinions-the-path-breaking-website-is-dead-some-lessons-it-taught-us/#52613ea267ad
Gupta, P., & Harris, J. (2010). How e-WOM recommendations influence product consideration and quality of choice: A motivation to process information perspective. Journal of Business Research, 63, 1041–1049. doi: 10.1016/j.jbusres.2009.01.015
Haugtvedt, C. (2007). Consumer behavior. In Encyclopedia of social psychology (Vol. 1, pp. 174-174). Thousand Oaks, CA: SAGE Publications, Inc. doi: 10.4135/9781412956253.n104
Lee, J., Park, D. & Han, I. (2008). The effect of negative online consumer reviews on product attitude: An information processing view. Electronic Commerce Research and Applications, 7(3), 341-352. doi: 10.1016/j.elerap.2007.05.004
Mirikitani, J. (2015). Yelp. The SAGE encyclopedia of economics and society (Vol. 1, pp. 1735-1738). Thousand Oaks, CA: SAGE Publications, Inc. doi: 10.4135/9781452206905.n739
Smith, A. & Anderson, M. (2016). Online shopping and e-commerce. Pew Research Center. Retrieved from: http://www.pewinternet.org/2016/12/19/online-reviews/
Weisstein, F.L., Song, L., Andersen, P. & Zhu, Y. (2017). Examining impacts of negative reviews and purchase goals on consumer purchase decision. Journal of Retailing and Consumer Services, 39, 201-207. doi: 10.1016/j.jretconser.2017.08.015
Zimmer, S. (2015). User-produced content. In The Sage encyclopedia of economics and society (Vol. 1, pp. 1650-1651). Thousand Oaks, CA: SAGE Publications, Inc. doi: 10.4135/9781452206905.n700
Extra notes
Online shopping and online reviews are a global thing (similar results for the Texas and S. Korea study)
My paper tries to consider what happens when there are many products available and a choice needs to be made how reviews with determine whether a customer will buy or not.
The BIG TAKEAWAY from these studies is that when a customer really wants a product and is willing to process information, online reviews have a huge impact on consumer decision.
The process and step by step are not explained enough for the first 3 studies compared to the last one.
Copied and pasted pretty much the entire fourth research, make sure to introduce everything, ie say the finding of this study show…
Make sure to look at her guidelines for those in text citations, for instance how often they should be inserted.
Make sure to have a conclusion for the research studies, like a little paragraph after but maybe not because there is no way to citate it, so maybe save that for the conclusion.