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A Refereed Monthly International Journal of Management Indexed With THOMSON REUTERS(ESCI)
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2020
2019 2018
A Refereed Monthly International Journal of Management

Impact of Electronic Word of Mouth on Brand Image and Purchase Intention towards Lifestyle Products in India

Author

Devkant Kala

Assistant Professor

Department of Marketing

University of Petroleum & Energy Studies, Dehradun

D.S. Chaubey

Professor & Dean

Uttaranchal University, Dehradun

Abstract

The expansion of the Internet has enabled customers to quickly and conveniently interact with other customers and has established the phenomenon known as electronic word ofmouth (eWOM). This easier, wider and faster medium of communication is not restricted to strong social tie groups, thus the message itself plays a critical role in creating the brand image and persuading purchase intention. The present study attempts to examine the extent to which eWOM can influence brand image and purchase intention in the lifestyle products in the Indian context. Based on the information obtained from 313 respondents who had experience within the online communities, this paper analyses the impact of eWOM, brand image and purchase intention using structural equation modeling. The results obtained show the significant impact of eWOM on brand image andthe mediating role of the brand image between eWOM and purchase intention. The present study recommends that marketers should put greater emphasis on eWOM in order to maximize brand popularity that resultantly would influence consumers’ purchase intention.

Keywords: Electronic word of mouth (eWOM),brand image, lifestyle products, India.

Introduction

Word of mouth (WOM) is widely considered as a powerful influence in the consumer marketplace, especially on consumers’ information search and subsequent decision making (Money, Gilly,& Graham, 1998). The rise of the internetand computer-mediated communication has increased consumers’ opportunitiesto obtain and express anonymous unprejudiced opinions on a multitude of platforms and enhanced the possibilities to easily spread these opinions to a large number of people across the globe (Dellarocas, 2003; Hennig-Thurau& Walsh, 2004; Hennig-Thurau, et al., 2004; Goldsmith & Horowitz, 2006). The Internet has provided a modernized setting for WOM which offers a fertile ground for electronic word ofmouth (eWOM) communication. eWOM is any positive or negative statement made by customers (potential, actual or former) about a product or company, which is made available to a multitude of people and institutions through the internet (Hennig-Thurau et al. 2004).The accessibility, reach, openness and simplicity of the internet have given the opportunities to organizations to influence and monitor the digital WOM. The rapid development of the internet,especially Web 2.0 tools has considerably increased the degree and extent of WOM communication.

Comparing with WOM, Bickart and Schindler (2001) showed that eWOM may have higher credibility, understanding and relevance to customers than commercial sources of information on the internet created by marketers. Spoken word versus written word, face‐to‐face interaction versus indirect interaction, identification versus anonymity, and narrow reach versus broad reach are the dimensions which differentiate WOM with eWOM. As the number of internet users is growing and the number of people who post or share their opinions or experiences is also increasing, internet-mediated communication has become more and more important eventually and as result companies are framing social marketing strategies(Kaplan & Haenlein, 2010). eWOM is recognized as an effective tool for building brand awareness, creating hype in the marketplace, influencing purchase decisions and developing brand loyalty (Fergusson, 2008).

The present research work has been taken up with the intention to investigate the impact of eWOM on brand image and purchase intention towards lifestyle products.A study of this nature is justifiable in Indian perspective as it is the second fastest growing economy in the world, after China. Together with a population of 1.32 billion people, India is designated as the second largest emerging consumer market in the world and rapid economic transformations have led to an increase in the consumption. Moreover, this research is interesting to be done because India occupied the significant position in the usage of internet, social media, and smartphones.With more than 462 million users, India has become the second largest country by the number of internet users after China. Total number of Facebook, Twitter and LinkedIn users in India are 112, 40 and 30 million respectivelyin 2016. As per the estimation of Investment and Technology Promotion Division, Indian Ministry of External Affairs, with 204.1 million smartphones, India will be the world’s second largest smartphone market by 2016. The ambitious Digital India project of the Government of India will also act as a catalyst for the growth of electronic communication in India.Therefore, the outcomes of this study will be of immense value to marketers for designing appropriate promotional strategies in general and social media strategies in particular to influence consumer purchase decision in this emerging market.

Literature Review and Hypothesis Development

Electronic Word of Mouth (eWOM)

WOMcommunication is a widely acknowledgedas a non-commercial and trustworthy source of information that has a massive effect on consumer attitude formation and purchase behaviour. With the rapid growth of the internet, eWOM has emerged as a way for consumers to engage in non-commercial advertising, share and discuss direct experience about the specific product and brand (Chevalier & Mayzlin, 2006). When eWOM about a product is positive, consumers are likely to consider the product for the consumption purpose and vice-versa (Park and Lee, 2008). In general, communication theory posits that eWOM can function as both informants and recommenders because they may provide user-oriented product information as well as recommendations by previous consumers (Park, Lee, & Han, 2007). These inform and recommend function can play a powerful role because eWOM are consumer-governed channels, sender is independent, information is considered as more trustworthy (Brown et al., 2007), effectiveness is higher than the traditional marketing activities (Trusov et al., 2009)and reduces the consumer’s risk (Hennig-Thurau & Walsh, 2004).Social media and product reviews are the most prevalent form of eWOM and consumers seek such platforms when gathering pre-purchase product information and forming purchase intentions (Schindler and Bickart, 2005; Sen and Lerman, 2007; Adjei et al., 2009; Zhu and Zhang, 2010).Researchers argued that marketers must pay attention to eWOM because of a wide coverage for an unlimited period of time (Hennig-Thurau, et al. 2004),cost-effective (Dellarocas, 2003), prompt communication (Huang et al. 2011), and thus can improve brand awareness and image among consumers (Yang, 2013b).eWOM is extremely popular, and thus if eWOM is managed well, it has a huge potential to transcend a product from a small market to a much larger one (Park & Kim, 2008).

eWOM and Brand Image

Brand imageis a crucial competitive advantage that helps in creating value through differentiating the brand, forming purchasing rationales, constructing sense and feeling, and a significant value for organizations (Aaker,1996;Keller, 2009). It is established when consumers develop ideas, feelings, and expectations towards certainbrands as they learn, memorize and become accustomed to them (Keller, 1993). Since the fundamental purpose of a brand is to provoke confidence, feeling of trust, strength, durability, security and exclusivity (Aaker, 1996; Keller, 1993), thus it can be considered an important means of decreasing uncertainty and providing useful information that can help in directing consumer decision-making processes (Erdem et al., 2002).Keller (2003)advocatedthat a positive brand image can be established by connecting the unique and strong brand associations with consumers' memories about the brand and supported by effective marketing campaigns. Jalilvand and Samiei (2012) examined the effect of eWOM on brand image and purchase intention in Iranian automobile industry and found that eWOM is one of the most effective factors influencing brand image and purchase intention. They advocated that positive eWOM helps in increasing customers’ purchase intentions, creating a favorable image of the organization and its brand, and reducing promotional expenditures. Torlak et al. (2014) concluded that brand image has an important influence on purchase intention of mobile phone brands through eWOM. Lien et al. (2015) indicated that brand image is a key driver that positively influences hotel purchase intentions.Using social media as a platform of consumer expression, consumers are actively involved in the creation and enhancement of meanings of brands as shared objects (Muniz and O’Guinn, 2001; Jansen et al., 2009; Hanna et al., 2011).Based on the researches above, it has been found that eWOM has an impact on brand image.Therefore, this study proposes that:

H1: Electronic word of mouth (eWOM) has a significant impact on brand image.

eWOM and Purchase Intention

eWOM messages can effectively reduce the risk and uncertainty when purchasing products so that consumer purchase intention and decision making can be further influenced (Chatterjee, 2001; Wang et al., 2012; Tsimonis and Dimitriadis, 2014).Chevalier and Mayzlin (2006) found that online communications significantly influence the product purchase intention of consumers. Berger, Sorensen and Rasmussen (2010) found the significant relationship between the quantity of online reviews and favourable purchase intention of consumers towards the specified brand. Lee, Lee and Shin (2011) found that products with more favourable reviews generally sell better. However, if the number of negative reviews about product increases, consumers will learn its many disadvantages and lead to a negative effect on purchase intentions (Park & Lee, 2008). However, it is also predictable that negative reviews are more influential than positive messages about the products and that negative messages also play an important role in consumer decision making (Lee, Lee & Shin, 2011).Thus, eWOM communication is extremely useful for customers to build up their buying decision regarding a particular product or brand.

As an internet-based version of WOM, opinions, online reviews, product consumption experiences, the new information presented from the perspective of consumers who have purchased and used the product, have become a major informational source for consumers. New marketing channels, such as review sites, social networking sites and blogs offer new possibilities for marketers to promote their products or services. According to Nielsen (2013), consumer trust in online advertising is growing. WOM recommendations are perceived as most trustworthy by consumers (84%), but also trust in advertising on branded websites (69%) and trust in online consumer opinions is growing (68%). In this digital world, the concept of eWOM gaining popularity by leaps and bounds and thus, organizations must frame effective internet-mediated communication strategies for gaining competitive advantage.Therefore, this study hypothesizes that:

H2: Electronic word of mouth (eWOM) has a significant impact on purchase intention.

Brand Image and Purchase Intention

Purchase intention can be considered as one of the main components of consumer cognitive behavior that shows consumer’s conscious plan to make an effort to purchase a product (Spears and Singh, 2004).Researchers indicated the presence of a significant relationship between brand image and purchase intention (Shukla, 2010; Wu et al., 2011; Lien et al., 2015). Charo et al. (2015) found that eWOM and brand image have significant and positive impact on purchase intention. Jallilvand and Samiei (2012) and Torlak et al. (2014) found that brand image have moderating effect in the relationship between eWOM and purchase intention. Several studies have suggested that eWOM has a positive influence on purchase intention and moderating role of brand image in this relationship. The argument presented above lead to the following research hypothesis:

H3: Brand image has a significant impact on purchase intention.

Research Methodology

Data for the present study was collected from Indian consumersusing an online survey developed on Google Forms in April and May, 2016.Consumers were invited to participate in the study through email and by posting invitations to well-know sites askingpotential respondents to visit the website to complete the questionnaire. The onlinesurvey is widely used research instruments as itfacilitatesprompt transmission andfast turnaround as well as considerable cost advantages. A total of 328 consumers participated in the study, with a final valid 313 questionnaire being used in this study, excluding 15 responses that were unreliable or insincerely answered. The existing literature helped in the preparation of the questionnaire and questions were selected based on related studies. Some questions were then modified by the researchers in order to focus on specific information.

The survey questionnaire consisted of two sections. The first section of the questionnaire contained questions to examine surveyed consumers’ demographic profile. The second section of the questionnaire was concerned with various factors related to eWOM, brand image, and purchase intention.Respondents were asked to indicate their level of agreement with each of the 12 attributes related to eWOM, brand image and purchase intention in a five-point Likert-scale ranging from 1 (strongly disagree) to 5 (strongly agree). Out of 12 attributes, five were related to eWOM (Park et al. 2007; Wangenheim & Bayon, 2004; Wallace et al. 2009), four were associated with brand image (Davis et al., 2009; Cho, 2011)and three variables were concerned with purchase intention ((Shukla, 2010). In order to ensure the validity of survey instrument, the initial questionnaire was given to a panel of experts and faculty members to judge its content’s validity, the clarity of its items meaning and to assure its linkages with the study objectives. In order to validate the reliability, the questionnaire was pilot tested using 40 respondents, representing 12% of the total sample size, who were considered the representatives of the study population. The value of Cronbach’s alpha was found 0.834, which suggested the acceptable level of reliability of the questionnaire. The data thus received was systematically arranged, tabulated and analyzed using SPSS 22.Data analysis involves descriptive statistics using SPSS 22 and structural equation modeling using AMOS 18.

Results

Sample Profile

The demographic profile of respondents shown in table 1 reveals that 8.9% of respondents were from the age group of up to 20 years, 70.6% were from 21-30 years, 13.7% were from 31-40 years and 6.7% were above 41 years. Out of 313 respondents, almost 70 percent of respondents were male and 30 percent of respondents were female. As regards to education level, 32.6% respondents were graduate, 50.8% were post-graduate, and 16.6% were professional degree holders such as MBA, B.Tech etc. The majority of respondent fell into the category of students.

Table 1: Demographical Profile (N= 313)

F

%

F

%

Age

Upto 20 Years

28

8.9

Education

Graduate

102

32.6

21-30 Years

221

70.6

Post Graduate

159

50.8

31-40 Years

43

13.7

Professionals

52

16.6

Above 41 Years

21

6.7

Occupation

Students

197

62.9

Gender

Male

220

70.3

Private Employees

101

32.3

Female

93

29.7

Government Employees

15

4.8

Structural Equation Modelling (SEM)

SEM is a multivariate technique which combines multiple regression with confirmatory factor analysis (CFA) to examine the series of dependence relationship simultaneously of the hypothesized model. SEM has two mechanisms, namely measurement model, and structural model. The measurement model is basically meant for the reliability and validity of the latent variables and observed variables, and the structural model is concerned with the path strength and relationship among the latent variable.The estimations of the parameters and the overall fit index of the measurement model are based on the maximum likelihood (ML) method. The basic conditions assumed for the use of ML estimation are met or closely approximated in the study (Byrne, 2001). Further, the sample is sufficiently large (n=313), over the recommended size of 200 cases (Medsker et al., 1994), the scale of observed variables is continuous, and no violations of multivariate normality are found in the survey responses.

To test the measurement model, a CFA is conducted by using AMOS 18.0. Figure1 shows the measurement model which consists of three constructs, namely, eWOM, brand image, and purchase intention. These three constructs are measured by 12 variables. As presented in Table 2 the reliability of the measurement items was verified using Cronbach’s α to assess the internal consistency of the constructs in the applied model. The level of internal consistency for each construct was acceptable, with the alpha ranging from 0.659 to 0.792, which exceeded the minimum hurdle of 0.60.

Table 2: Item Loading and Reliability

Construct and Item

Standardized Loading

Mean

SD

α

Electronic Word of Mouth(CR = 0.701, AVE=0.245, ASV=0.193)

eWOM1

I understand a product better after receiving relevant information about that product on online reviews.

0.824

4.01

0.768

0.704

eWOM2

A comment or update about a product/brand on eWOM forms has an influence on how I consider that product.

0.635

3.94

0.718

eWOM3

I am likely to change my opinion about a product/brand, after viewing a positive or negative comment about that product on eWOM forum.

0.517

3.85

0.757

eWOM4

Given a choice between two products, one recommended on eWOM forums and the other not, I would always choose to buy the recommended product.

0.587

3.72

0.851

eWOM5

eWOM forms are important sources of information for me.

0.563

3.92

0.760

Brand Image(CR = 0.740, AVE=0.524, ASV=0.507)

BI 1

In comparison to other products/brand, this product/brand has high quality.

0.483

3.49

0.817

0.659

BI 2

I can reliably predict how this product/brand will perform.

0.518

3.58

0.785

BI 3

This brand comes to mind immediately when I want to purchase the product.

0.621

3.79

0.875

BI 4

I feel connected to this brand.

0.596

3.43

0.914

Purchase Intention(CR = 0.885, AVE=0.607, ASV=0.306)

PI 1

I would buy this product/brand rather than any other brands available.

0.749

3.47

0.884

0.792

PI 2

I am willing to recommend others to buy this product/brand.

0.920

3.69

0.798

PI 3

I intend to purchase this product/brand in the future.

0.851

3.77

0.806

Composite reliability (CR) is used to measure the reliability of a construct in the measurement model. CR is a more presenting way of overall reliability and it determines the consistency of the construct itself (Hair et al., 2010).Table 3 shows the CR of eWOM is 0.701, brand image is 0.740 and purchase intention is 0.885. So it clearly identified that in measurement model all construct have good reliability.Convergent validity shows the degree to which indicators of a particular construct have a high percentage of variation in general (Hair et al., 2010). The convergent validity is measured by standard regression weight. The consequence of standard factor loading (standard regression weight) estimates shows that the indicator variables significantly represent the latent variables. The standard factor loading should always above 0.50 (Hair et al., 2010). All measurement items have standardized loading estimates of 0.5 or higher (ranging from 0.483 to 0.920 at the alpha level of 0.05, indicating the convergent validity of the measurement model.

Discriminant validity shows the degree to which a construct is actually different from other constructs (Hair et al., 2010). The discriminant validity is confirmed when average variances extracted (AVE) of the particular constructs are more than the average shared variances (ASV) between the constructs. Table3 shows that AVE of the particular constructs is more than the ASV. Overall, these measurement resultsare satisfactory and suggest that it is appropriate to proceed with the evaluation of the structural model.

Figure 1: Measurement Model

Structural model

The model fit indices like the comparative fit index (CFI), Goodness of fit index (GFI), Normed fit index (NFI), Tucker lew is index (TLI) and Root mean square of error approximation (RMSEA) were chosen to evaluate the model fit (Hair et al., 2010). The model fit indices of the structural model and the cut-off value of those fit indices arepresented in Table. The goodness-of-fit statistics show that the structural model fit the data reasonably well.

Table 4: Goodness-of Fit Statistics

Model fit Statistics

Structural Model

Cut-off Value

χ2/df

2.686

1.0 – 3.0

GFI (Goodness of Fit Index)

0.959

> 0.90

NFI (Normed Fit Index)

0.947

> 0.90

CFI (Comparative Fit Index)

0.977

> 0.90

TLI (Tucker Lewis Index)

0.970

> 0.90

RMR

0.026

< 0.50

RMSEA (Root Mean Square of Error Approximation)

0.050

< 0.08 Good Fit

Figure 2: Standardized Regression Coefficients – ProposedModel

Table 5: Maximum Likelihood Estimates for Model (N = 313)

Independent Variable

Dependent Variable

Standardized Estimate

Standard Error

t-statistic

p -value

eWOM

Brand Image

0.491

2.127

2.458

0.045

eWOM

Purchase Intention

0.075

0.659

0.788

0.430

Brand Image

Purchase Intention

0.917

0.150

6.697

***

Table 5 presents the results of the individual tests of the significance of the relationship between the variables. Amongthe three relationships tested, two were found to be significant, and one relationship was insignificant at the alpha level of 0.05. The impact of eWOM on the brand image (β= 0.491, t = 2.458, and p = 0.045) found significant, indicating that eWOM helps in creating the favourable brand image. Brand Image had a significantly positive impact on purchase intention, with β= 0.917, t = 6.697, and p = 0.000, indicating that brand image is an important precursor of purchase intention of lifestyle products. The impact of eWOM on purchase intention (β= 0.075, t =0.7888, and p = 0.430) found insignificant, indicating that eWOM does not help in encouraging purchase intention with respect to lifestyle products.

Table 6: Hypotheses Test Results

Hypothesis

Standardized Estimates

Results

Electronic word of mouth has a significant impact on brand image.

0.491

Supported

Electronic word of mouth has a significant impact on purchase intention.

0.075

Not

Supported

Brand image has a significant impact on purchase intention.

0.917

Supported

Discussion

The escalating prevalence of electronic communication and specifically eWOM is changing the way that consumers search for information, evaluate alternatives, and make choices. With the substantial growth in eWOM in the Indian context, there is a need forresearchers and marketers to better understand how eWOM might influence consumer’s purchase intention.This research explores the possible effects of eWOM influences on brand image and purchase intention. It has been observed that consumers who feel uncertainty toward the product tend to search for the online information. Viewing online information and reviews is helpful in making more informed and confident purchase decision. Reviews that are clear, logical and persuasive, with sufficient reasons based on specific facts about the product, have a strong positive effect on the brand image and subsequent intention to purchase.The results of the study reveal the significant impact of eWOM on brand image, indicating that consumers consider the information or reviews obtained from eWOM channels and use the information in forming the brand image. This finding is in line with previous studies which established eWOM as a key factor that affects brand image (Jalilvend & Samiei, 2012; Torlaket al., 2014). The finding indicates that brand image is formed through positive WOM recommendations from others who had previous experiences in using that brand.It has also emerged from this study that eWOM does not have a direct significant impact on consumers’ purchase intention.This finding of the study is contrary to the findings of Chevalier and Mayzlin (2006) in USA, Park, Lee, &Han (2007) in South Korea, Jalilvend & Samiei (2012) in Iran but similar to the findings of Torlak et al (2014) in Turkey. Brand image is more effective on purchase intention compared to eWOM highlighting the decisive role of brand image in persuading customers to purchase the product. It can be understood that the effect of eWOM on purchase intention can be explained through brand image. Similar to Jalilv and Samiei (2012) and Torlak et al (2014), this study also report brand image as a mediating variable on purchase intention in the context of eWOM.

The relationship between eWOM and purchase intention indicates that although usage of internet is growing among Indians, but web 2.0 tools are not enough in influencing customer purchase decisions. However, this points out that online reviews and information do not motivate customers to purchase the products directly, but this information helps marketers in building the favourable image of the brand which indirectly leads to positive intention to purchase the product.By getting positive recommendations from other people whom customers can trust, a higher degree of confidence is likely to be enhanced towards the brand. Such confidence is likely to influence consumers’ behaviour and lead to positive purchase intentions.This finding can be justified with the fact that the internet has gained popularity in India of late. The internet penetration in India was 18% in 2014, 27% in 2015 and 34.8% in 2016. In BRICS countries the penetration is 66.4% (Brazil), 71.3% (Russia), 52.2% (China) and 52% (South Africa) in 2016. In the case of USA, South Korea, Iran and Turkey internet penetration is 88.5%, 85.7%, 48.9% and 58% respectively in 2016. Changing demographical patterns, nascent stage of online retailing, consideration to aesthetic values in product purchase, lack of trust on anonymous information providers and significance of past experiences with the brand may also be the reasons for the poor relationship between eWOM and purchase intention. It seems that most consumers search for online information and reviews for better understanding the brand and its features but do not purchase the product only on the basis of information provided in this open and uncontrollable platform.Thus, it is believed that as the penetration of internet increases, certainly, this would be one of the most important sources for customers to search, evaluate and purchase the products.

This research brings several new insights for organizations to usethe digitalization of WOM as part of their strategic marketing campaign in gaining new consumers, holding onto the ones they already have and creating the favourable imageof brands.Customers now want to be partners in marketing rather than be marketed at. eWOM can significantly help in forming the brand image which consequently leads to customer’s positive purchase intention, so marketers should not ignore the proliferation of online consumer-to-consumer communication.Particularly, favourable WOM is highly regarded as the driving factor of brand choice and vice versa. Marketers can motivate satisfied and brand loyal customers to make online reviews about the features and functions of productsin order to maximize brand popularity that consequently would influence consumers’ preferences during the purchase process.The strong brand image formed because of eWOM can also reduce the promotional expenditures of organization on traditional media to a great extent.Taking into account the low cost, broader scope, promptness and increased anonymity of eWOM, it seems likely, as time progresses, that consumers in increasingly larger numbers will either seek or simply be exposed to the advice of online opinion leaders. In addition, managers can improve the brand image of lifestyle products by increasing assortment, improving quality, offering the products in the price worthy of value, and pleasantly offering after-sale services. These improvements directly increase the purchase intention of the products.

Conclusion

With the advent of Internet-based technologies, consumers are gradually moving towards computer-mediated communication to obtain the information they need to make purchase decisions. It is important to say that positive eWOM play an important role in creating a favorable image of the company and its brand, increasing customers’ purchase intentions,and reducing promotional expenditures. The study depicts three important conclusions; first, eWOM do not lead to purchase intention of customers towards lifestyle products; second, customer’s purchase intention does get influenced by brand image and; third, brand image acts as a mediating variable between eWOM and purchase intention. Since online WOM function both as informants and recommenders, they can be used strategically as a communication channel. Consumer opinions influence other consumers, so companies must be aware of the potential of this phenomenon, and should try to communicate, and/or influence, this kind of communication. They are advised that electronic, customer generated communication should not be used as a substitute for traditional advertising, but rather be treated as an element of the organization’s marketing communication strategy.Web 2.0 applications offer opportunities for marketers and brand managers to cooperate with consumers to increase the visibility of brands. It is advocated that if eWOM is managed well, it has a huge potential to metamorphose the marketing activities and outcomes for the organization. In the Indian context, where numbers of internet users and online shoppers are growing rapidly, it is recommended that marketers should pay attention to eWOM as a significant marketing tool that influences brand image, competitiveness, and long-term success.

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