Impact of Online Consumer Reviews - Thesis Proposal Example

Running Head: Impact of Online Consumer Reviews/Ratings Impact of Online Consumer Reviews/Ratings [Institute’s Impact of OnlineConsumer Reviews/Ratings Abstract Consumer ratings/reviews play a key role in everyone’s purchase decisions today, and thus, the proposed research will include efforts of the researcher to analyze the impact of online consumer reviews/ratings on consumer behaviors and their purchase decisions. In brief, it is an observation that more and more consumers are now making their decisions based on product- related-reviews available on the internet before they buy a product, and thus, the proposed research will include endeavors to analyze such an impact by using both secondary and primary research methodology to fulfill aims and objectives of the research. Research Statement In this manner, the researcher will focus on the following research statement to achieve the aims and objectives of the study: “To analyze the impact of online consumer reviews/ratings on consumer behaviors and their purchase decisions” Objectives The main aims and objectives of this research are to: Identify and analyze the impact a platform of online consumer reviews leaves on the behavior of consumers. Analyze the extent of such changes in consumer behaviors and whether such alterations result in alteration in purchase decisions or not Analyze the psychological and social changes in consumer’s decision-making processes after going through online consumer reviews Analyze the role of online consumer reviews in terms of their availability, readership, and classification. Literature Review Consumer ratings/reviews play a key role in everyone’s purchase decisions today. Organizations must spend time and resources in measuring its impact on the buying patterns to better reach their customers. The organizations and firms find it easy to design their marketing strategies if they understand what affects the consumer behavior or buying pattern. It includes understanding the psychology of consumers as to how they believe, identify rationale, and select between the available substitutes. “Firms must also consider how society influences consumer behavior. There are several factors in the environment that have an impact on consumer perceptions, attitudes, and behaviors” (Perner, pp.1-14, 2008). An understanding and management of these factors may assist marketing professionals in helping consumers to decide in favor of their brands. More and more consumers now base their decisions on product- related-reviews available on the internet before they buy a product. “The percentage of customers who follow online reviews have exceeded those that follow newspaper or magazine reviews” (Ahuja, 2009). For this purpose, most people these days use social networking sites and involve themselves in comparison-shopping. Most online buyers indulge in social networking in form of reading and writing blogs and customer reviews. Thus, people who shop from e-malls are more likely to give their opinions online as compare to those who use the regular brick-and-mortar stores for shopping. One distinct feature of online reviews is that the information is available in high volume as compare to that one can get from traditional offline sources. It also contains information from many sources that is both positive and negative as compare to only getting either positive or negative information from a single source at a time. Analysis has indicated that online reviews are found in various forms and differ in terms of reach, scope, and source. “A strategy that marketers use to ensure that positive comments reach the users is that they make some online reviews more easily accessible by placing them close to online product ads” (Chatterjee, pp. 129-133, 2001). Thus, reviews provided at e-malls or e-storefronts are most accessible and have greater impact on purchase decisions. “Online consumer reviews/ratings or word of mouth has an impact on hybrid decision processes or recommendation-based heuristics in which the buyer seek out others’ experiences to lessen the uncertainty in decision making” (Olshavsky and Granbois, pp. 94, 1979). Moreover, “the impact that a negative review has on the purchase is far more influential than a positive one” (Brown and Reingen, pp. 350-362, 1987; Weinberger, Allen and Dillon, pp. 398-404, 1980). It has been an observation that managers these days face the problem of a vast amount of information accessible to their target consumers. The information is both positive as well as negative. Such available information is traced to general environmental forces, government agencies, consumers, and even competitors. Negative information has a stronger impact in a way that it increases the uncertainty and ambiguity in consumer psyche, which holds him/her from making a buying decision. A study, conducted by “comScore and the Kelsey Group examined the impact of online consumer reviews on the prices that consumers would pay for the products” (comScore & The Kelsey, 2007). The study that included approximately two thousand internet users in the United States in late 2007 indicated that customers would pay roughly twenty percent extra for products and services having the highest ranking than for the same service receiving a lower rating. According to the study, the online consumer reviews have a great impact on offline purchases. One out of every four internet-users declared that they follow online available reviews for services like, hotels, restaurants, legal, automotive, and home services, before making a purchase decision (comScore & The Kelsey, 2007). Another study, conducted by Deloitte & Touche USA LLP in September 2007 (Deloitte & Touche, 2007), showed that about 82% of the consumers who refer to online reviews while making a purchase decision have direct influence of those ratings, either to buy a different product than they had been thinking to purchase or to buy the same one. It is to be noted that the percentages are a bit higher for youngsters but people from all age groups are referring to consumer ratings. Interestingly, the impact of consumer reviews is not limited only to the online users, 70% of users share them with their family, friends and peers (Deloitte & Touche, 2007). These researches show that online reviews are having an increasing impact on buying pattern of consumers. Consumers seek recommendations to provide them with enough information to process before reaching a purchase decision. With ease of access to the internet, people are able to interact freely with one another, which have led to greater information richness. People give views, suggest, and recommend various products and services via blogs, ratings, or reviews. Organizations are aware of the increasing impact of online consumer reviews on their sales and thus, they are making conscious efforts in making more and more positive information available to the customers to assist them in making decision in favor of the firms’ products and services. Methodology Although recognition of research statement plays a significant role in creating fundamental basis for the research, however, it has been an observation that methodology is one of the most imperative components and phases of any research that facilitates a research in acquisition of identified aims and objectives. From this understanding, the research proposal will now include description of selected methodology that will allow the researcher to acquire data and information on the impact of online reviews and ratings on behaviors and decision-making of the consumers. Brief research has indicated that a few experts have endeavored to know about this subject, and thus, the researcher will be benefiting from such researches’ observations that will provide a critical perspective to the proposed study. In this regard, secondary research methodology will be the basis of the proposed study that will include analysis and scrutiny of available material on the identified topic in the form of books, journals, magazines, etc In specific, books, as well as journals are the most accurate and authentic sources of information that will enable the researcher to acquire quality data related to the study. Moreover, the researcher will put efforts to identify magazines that will be having reviews and ratings on different things that will give an idea of the way ratings and reviews work. Besides, books, journals, and magazines, since a decade, internet has now become the easiest and efficient platform of carrying out research, and thus, it will be one of the major tools of the researcher during secondary research methodology. In this regard, the researcher will put efforts to identify authentic websites that will facilitate researcher in the acquisition of quality information on consumer behaviors and their relation with online consumer reviews and ratings. In addition to websites, various organizations are now available on the internet with archives of their journals and magazines that will save a huge amount of time of the research. However, on the other hand, it will be very important to identify and select authentic websites due to existence of enormous number of both authentic, as well as inaccurate information. In this regard, the researcher will focus primarily on authentication while selecting websites on the internet. Besides secondary research methodology, the researcher will benefit from primary research method that will be an efficient way of verifying acquired information during the secondary research phase. In this regard, the researcher will select individuals on random basis, and will carry out surveys through questionnaire including some of the following questions: How often do you go for shopping in a month? Have you ever used internet to search for products/services? Do you read reviews/ratings of the products/services before going for them? How much role does review or rating plays in your decision of buying a product? In conclusion, primary methodology will facilitate the researcher in acquiring information regarding the impact of online consumer reviews/ratings that will be the most important benefit of the primary research methodology. In this regard, the research will acquire a balanced approach by using both primary, as well as secondary research methodologies in a planned way. Conceptual Framework Diagram of Program # Task Name Date Date Date Date Date Date Date Date Date Date 1 Literature Review 1st week 2 Submission of Research Proposal 2nd week 3 Secondary Research 3-4th week 4 Analysis of Data 5-7th week 5 Primary Research 8-10th week 6 Distribution of Questionnaires 11th week 7 Collection of Questionnaires 13th week 8 Analysis 14-16th week 9 Rough Draft of Dissertation 17-19th week 10 Final Submission 20th week Research Plan Specifically, the researcher will carry out the proposed research in the following way: Identification of the topic Submission of Research proposal Classification of the sources Assessment and analysis of the sources Drafting of the research material Submission of the draft Writing the final report Proofing/Editing Submission of the final dissertation References to be used Ahuja. 2009. “Online Buyers scouring for deals”. Report Business. Retrieved on December 02, 2010: www.reportonbusiness.com Brown and Reingen. 1987. “Social ties and word-of-mouth referral behavior.” Journal of Consumer Research. Volume 14, pp. 350-362. Chatterjee, Patrali. 2001. “ONLINE REVIEWS: DO CONSUMERS USE THEM?” Advances in Consumer Research. Volume 28, pp. 120-133. comScore and The Kelsey. 2007. Group Purchase Behavior Subsequent to Online Review Consultation. The Kelsey Group press. Davis, L.L. 1995. “Effects of physical quality and brand labeling on perceptions of clothing quality.” Perceptual and Motor Skills. Vol. 91, pp. 671-677. Deloitte & Touche. 2007. “Most Consumers Read and Rely on Online Reviews; Companies Must Adjust.” Marketing Charts. Retrieved on December 02, 2010: http://www.marketingcharts.com/interactive/most-consumers-read-and-rely-on-online-reviews-companies-must-adjust-2234/deloitte-consumer-review-purchase-influencejpg/ Hatch, K. & Roberts, J. A. 1995. “Use of intrinsic and extrinsic cues to assess textile product quality.” Journal of Consumer Studies and Home Economics. Vol. 61 (4), pp. 341-357. Lysonski, S., Durvasula, S. & Zotos, Y. 1998. “Consumer decision-making styles: a multi-country investigation.” European Journal of Marketing. Vol. 34 (12), pp. 10-21. Olshavsky and Granbois, 1979. Consumer decision: Fact or fiction? Springer. Perner, Lars. 2008. Consumer behavior: the psychology of marketing. University of South California. Weinberger, Allen, and Dillon. 1980. "Negative Information: Perspectives and Research Directions." Advances in Consumer Research. Volume 08, pp. 398-404. Read More