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Word-of-Mouth

To what extent influences Word-of-Mouth, in the field of music, the receiver's purchase intentions?

Word-of-Mouth wisdom:

6.1 Discussion Results

First, let's take a look at the revised research model including the supported and not supported hypotheses (see Figure 6.1).

Figure 6.1: Revised Research Model

As you can see the box “Opportunity to process information” and “Ability to process information” are almost hidden because of its pale colour. This is because of the fact that their hypothesis was not supported. Therefore, I had to remove them from the research model. The other variables and hypotheses are all supported and maintained in the research model.

For a further discussion concerning the revised research model I will start at the left side (MOA Theory).

6.1.1 The higher the level of the receiver’s motivation to process... (h3)

Information processing is the level and type of evaluation undertaken of information received by a consumer in resolving a purchase decision task. It is related to both the ways in which consumers differentiate between alternatives and the effort they are prepared to invest in the decision task. According to MacInnis et al. (1991) eWOM's effectiveness can be managed by increasing individuals’ levels of motivation, opportunity and ability (MOA theory).

MacInnis et al. (1991) based the definition of motivation on the MOA theory which combines readiness, willingness, interest and desire to engage in information processing. These points are the subject of one the survey's constructs 'motivation'. Though slightly different, those terms each suggest heightened arousal to process external stimuli such as eWOM.

Hennig-Thurau et al. (2004) delve into various factors that motivate consumers to engage in eWOM and participate online (i.e., forums). They found that eWOM participants exhibit a similar set of motivations as participants of traditional WOM. With an extremely high Beta score of |0,582| the independent variable 'motivation' implies that consumers are willing to assign processing resources to information in eWOM (i.e., message or review). Therefore hypothesis four is supported.

6.1.2 The higher the level of the receiver’s opportunity to process... (h4)

Opportunity reflects the extent to which a situation is apt to achieving a desired outcome (MacInnis and Jaworski, 1989) or the lack of interfere for achieving a desired outcome (MacInnis et al., 1991). The Internet gives individuals the power to interact with others any time and place. The only restriction the individual faces are the ones of himself/her-self (e.g., time, connection availability, etc...). The independent variable was expected to be a bit 'outdated' because most of the things (i.e., connection availability, etc...) are not really a matter of subject in the most of the world. Therefore, the independent variable was expected to have no influence on eWOM.

While motivation performed as expected, the effect of opportunity on eWOM was not significant. The lack of a significant effect for opportunity probably reflects the nature of the context where the 'opportunity' to participate in eWOM is ongoing. I also ran into a measurement issue similar to that encountered by McAlexander et al. (2002) in that many respondents had “pegged the scale” providing limited variance in the opportunity measures. It appears that opportunity plays a minor role in the Internet context, and it also points to the possibility that once a minimum threshold level of opportunity is provided, increasing levels of opportunity no longer have an impact on eWOM. Therefore, hypothesis five is not supported.

6.1.3 The higher the level of the receiver’s ability to process... (h5)

Gruen et al. (2005) defines ability as the member’s skills or proficiencies to engage in knowhow exchanges with other members. If ability to process information is low, prior knowledge cannot enter working memory and therefore information received from the message is unexplainable. It is clear that without the necessary skills an individual is not likely to be a part of eWOM.

Like with opportunity, the effect of ability on eWOM was not significant either. It nearly was significant ( p = 0,056 ). In Gruen et al. (2005) the effect of ability on eWOM was significant. The difference between mine and their research is, maybe that in stead of using four questions (Gruen et al., 2005) I used three questions to measure the consturct “ability to process information”.

The Beta score of |0,165| is reasonably high and explains the consumer's ability to process information and its influence on independent variable eWOM. The Beta score of | 0,327| (Gruen et al., 2005) is almost twice as high as mine. A reason for this effect is that it is possible that users think differently of using a forum (Gruen et al., 2005) or reading recommendations on the Internet. So, I like to conclude that hypothesis six not supported.

6.1.4 eWOM positively impacts the receiver’s purchase intentions (h2)

eWOM or word-of-mouse is basically the extension of traditional WOM on the Internet. In the marketing context, it is the informal exchange of positive and negative information between individuals about a particular product or service. Hennig-Thurau et al (2004) refer to eWOM communication "as any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet".

Research in marketing literature I discussed in Chapter 3 points out that eWOM plays an important role in decision processes in which the decision maker receives recommendations for the purpose of lowering the uncertainty and sum of information that has to be processed to make a decision (Olshavsky and Granbois, 1979).

The study found that eWOM had significant effects on the receiver's purchase intentions. Consistent with previous research on eWOM (Bickart and Schindler, 2001), I find that eWOM is perceived to be an important source of information by customers. Customers are able to depend on the Internet to provide answers to their questions.

eWOM, at least if send through informal sources, it is independent, as the sender has no direct interest in the product's sale, which adds to its credibility and trustworthiness. Indeed, given its non-commercial nature, eWOM is viewed with less scepticism than firm-initiated promotional efforts (Herr et al., 1991). However, in my research consumers do not completely agree whether ideas in general suggested are reliable but this result has not been compared to commercial marketing efforts.

Importantly, my findings provide evidence of a direct benefit of eWOM (i.e., for a company), overlooked in previous research (Balasubramanian and Mahajan, 2001), beyond the intrinsic value derived by customers participating in eWOM (Hennig-Thurau et al., 2004). The findings suggest that eWOM communication impacts the receiver's purchase intentions in a significant manner. Therefore, hypothesis two is supported.

6.1.5 Information Sources postively influence eWOM's influence... (h1)

In this thesis I have focussed on the determinants of eWOM and the extent to what influence it has on the receiver's purchase intentions. The following determinants were described in chapter 3: information processing of motivation, opportunity and ability (Gruen et al., 2005); positive and negative eWOM (Helm, 159); information sources (Bearden and Etzel, 1982); tie strength (Granovetter, 1973, 1982). These determinants were chosen because of its relevancy with the problem statement. Naturally, there are other determinants like credibility, trustworthiness, share of wallet, financial performance, etc... (more of this in Section 6.6)

For eWOM to be effective as decision-making guide, the consumer has to trust the sender (weak or strong tie). Information about the senders may be especially important in online environments where, no credible, meaningful relationships with others, consumers may rely on information in profiles to develop trust. Duhan et al. (1997) found that perceived tie strength influenced the selection of sources sought for eWOM. However, in the scope of online shopping, consumers often communicate with strangers with whom they have “weak-tie” sources. They may still choose to communicate with these unknown individuals, using whatever information they have to make trust inferences (McKnight et al., 2002).

When both strong and weak ties were available as sources of information, weak ties were more likely than strong ties to be activated for the flow of information. Weak ties were not only perceived as very influential, but they were far more numerous as sources of information than strong ties. This is consisted to several previous studies (e.g., Granovetter 1974) that found weak ties to dominate the flow of information. The consistency may be explained by information availability on the Internet.

In the research model the interaction (i.e., moderator) term 'Information Sources' plays a significant role in influencing eWOM's influence on the receiver's purchase intentions. While I expected this, the interaction term shows almost insignificance ( p = 0,046 ). Other researchers like Chevalier and Mayzlin (2003) show that online reviews about a book is related to book sales. Since a book is a related product to music, I would like to advise to do more research to lower this significance or, in the worst case, make it higher.

The large and positive relationship (Beta score |1,05|) tells one that individuals who reported higher levels of the interaction term and therefore has the most influence on 'Re-ceiver's Purchase Intentions'. This result is the same Dellarocas et al. (2004) had. They showed that online reviews about movies are representative of the movie-going audience at large, and that the online reviews are better predictors of movie revenues than professional reviews. Hence, I can conclude that hypothesis one is supported.