THE IMPACT OF PRODUCT REVIEW ON PURCHASE DECISION A CASE OF FOOD INDUSTRY IN KARACHI

CHAPTER 01 INTRODUCTION

Introduction

The internet has
developed as a medium which revolutionized the way people normally makes their
purchase decision. According to Sparks & Browning, (2011) a purchase
decision is influenced by a number of factors like (product attributes, product
marketing, brand Name & Product reviews). Product reviews among all is now
becoming common especially through platform of social media like, Facebook,
Blogs, Online reviews etc

 

Product reviews are
basically experiences of people who have already used that particular product. Researches
have shown that, people are now actively using these product reviews in order
to make or amend their decision about a product therefore, it has also become a
major factor in making a purchase decision. The increase in product reviews is
directly related to the enablement of internet and its availability on mobile
phones. The development of platform is mainly because of two things firstly,
the internet and secondly, the platform like: Facebook and Blogs have enabled
people to constantly review about the products of choice (Hu,  Pavlou 
& Zhang, 2006)

The Internet has made
it possible for more and more consumers to express and share experiences with
other consumers for free. The Internet today allows consumers to connect,
communicate, share interests, gather information and even make purchases. These
phenomena have become interesting for consumers, appearing as an opportunity to
extend their knowledge about products without buying them, helping in refining
their purchases. With the sharp technological evolution there has been an
increasing ease of access to content and, consequently, sharing of opinions.
John (2014) defines the reason as, consumers are constantly looking for the
information about the product which they can easily found on social media
platform through internet. The increase in online reviews depends upon the
increasing scarce of knowledge and accessibility of internet these days (Duan,
Gu & Whinston, 2008).

Previously WOM
marketing has gained significant important but, now after enablement of
internet and social media, product reviews, ratings have gained significant
importance and are also impact the purchase decision. According to a survey
carried out in UK markets, 41% of the shoppers says that, they went to online
reviews while making a purchase decision, especially when purchasing some new
product (Ludwig et al. 2013). However, 33% of the people says that, they
continually post their reviews on different blogs and Facebook sharing the
product experiences. Purchasers would than directly check these reviews and
decide their purchased action based on such comments. According to marketers,
product reviews refine the purchase decision. Similarly, in Pakistan food,
Electronics, Cars and Apparel sector are the sectors which are majorly
influenced by product reviews.

 

This research
therefore, focuses on the food sector and determine the impact of product
reviews on purchase decision. Since, in Pakistan the concept of product reviews
is in its development stage and generally people purchase products after having
a look on it physically but, the trend is changing dramatically the new
generation and age of internet is changing this perspective especially in the
market of Mobile Phones and restaurants. According to Mona, being marketing
strategist, we suggest our clients to develop their online reviews which
ultimately turned out to be a massive sales for them. The most important and
unique aspect of this product review is that, it is free of cost and can be
accessible anywhere at any time. This readily available within cost review from
large number of users tend to influence the purchase decision greatly as well
as, serves as a way to create a close relationship with customers since social
networks can capture great number of audience attention within less time
period, though helpful for both purchaser and seller (Geirinhas, 2014).

 

Background

Purchase decision is a
concept which is composed of different consumer attitudes, behaviour,
motivation & influence. Individuals have exposed to different window of
information and varieties of products; many great deal of choices and options
available in the market place impulse their purchase decision. Research proves
that, the decision making process is not easy and there are variety of factors
which together make a decision to purchase for instance, in food sector the
factors includes: reviews from other customers, ambiance of the restaurant,
taste and quality of the food, price and outlook of the product etc.

 

Food industry is a
sensitive business in which custoemrs while making purchase decision becomes more
concerned thus, the impact of online reviews will have a positive and negative
influence on the restaurants business also. According to Huang & Benyoucef,
(2012) due to strong influence and acceptability of online reviews, restaurants
and food making companies have automatically increased their quality because of
these reviews. According to a research carried out in UK, the increase in
marginal income of people moved them towards increasing their spending on food
sector along with the increased awareness through social media, product reviews
plays an integral role in making purchase decision of food products. Similarly,
according to Hussain (2012), in Pakistan product reviews in restaurant business
is the basic and essential aspect of increasing and creating an initial boom in
the business. People check these reviews online through Facebook and other
mediums and refines their decision to buy. According to a consumer survey, 29%
of the people normally change their decision to buy a product after having a
look on their reviews online.

 

Levy & Gvili (2015)
also concluded that, an online review is gaining more and more attention
because it is a message transmitted by an anonymous person is more credible and
stronger than a message conveyed directly by a company. According to John &
Norman (2012) it is communication (messages and reviews) which creates an
effect of persuasion among those who read it. In the same vein, Geirinhas
(2014) concluded that receiving a message through a friend has more impact than
receiving the same message directly of its commercial source.

 

With the paradigm shift
from offline communication to online communication, the importance given to the
opinion of others remains the same since the traditional (WOM) has always been
a great influence on what people know, feel and do (Buttle, 1998). With greater
accessibility to the internet, e-WOM (Online Reviews) are more accessible to
anyone in a shorter period of time (Yoo, Sanders, & Moon, 2013). Huang
& Chen (2006) have proved the commercial importance of sharing of views, have
influenced people to make refine and rational decisions.

 (Bhutta et al., 2014).

 

According to
Hennig-Thurau & Walsh (2003), e-WOM can be a positive message or negative
for a wide audience via the internet by a potential, current or former customer
about a product, a company or an institution. This form of information sharing
has become more and more common, since there is currently greater ease of
interaction between individuals in a virtual way, with the increase of the
existence of platforms that allow the sharing of information or opinions. This
is the case of social networks; opinion forums; sites; communities among
others.

 

Vermeulen &
Seegers, (2009) states that, with an increase in the number of people who have
access to internet it can be said that, more people will share their opinions online.
The research also shows that, in today’s world of technology and internet consumer
is more informed and seeks information online about a product or service before
to make the purchase within less time. This form of information search results
in more time spent by the client analyzing information and more time to
consider the recommendations made by other willing and motivated consumers to
share information online (Gupta & Harris, 2010). E-WOM tools are changing
the way consumers interact with each other and, in turn, how they interact
directly with business (Yoo et al., 2013).

 

Food sector in Pakistan
is known to be the most thriving business and therefore, role of online reviews
helps in shaping the purchase decision. The Facebook especially adds their
contribution in making online review integral important for purchase as they
allow to develop own personalized pages for free, with unlimited access. Similar
is the case in Pakistan food industry there are several pages like Foodict,
SWOT that serves as the major decision turners in purchase decision of people.
Normally consumer went online to know about a food product/restaurant and
within less time period they gather different reviews from a large number of
users. This helps in refining their decision making process.

 

Thesis Statement

Currently the
accessibility of internet is becoming common among people who are technology
users however, mobile connectivity and access to internet has although changed
the consumer behavior but, still a lot of people are not aware of these reviews
present online. The problem actually starts when people don’t go for review of
a product and ends up having a worst or a negative experience. E-WOM comes in
to refine this decision and situation. The problem lies when consumers purchase
some expensive product without having a review of it from other consumers
however, after purchase all the most he invested in buying such product gone
waste and doesn’t fulfill his objective.

The lower
awareness about such online reviews and accessibility of internet are the major
problem in having online review of a product. Age factor also is competent
factor and a major road block which ends up in negative experiences. This
research however, try to determine the impact of these reviews on refining the
purchase decision and in the end based on the data gathered from consumer
suggest some recommendation which aids in helping the situation.

 

Scope of
Research

The scope of
this research is limited to the food industry in Pakistan. Although online
reviews serves as a way to refine purchase in all the sectors leading from
Hotel to Aviation but, this research focuses attention to the food industry
resided in Karachi. With this scope of research, the research plans to gather
the data from a sample of respondents and this data would then be used to
determine the impact and relationship which express the impact of online
reviews on purchase decision in food industry.

Research
Objectives

Following is the research objective:

·        
To determine the impact of online reviews on
purchase decision in food industry of Pakistan

 

Research
Questions

Following are the research questions:

·        
What are the motives of consumers to search
online reviews?

·        
How do various online review platforms differ?

·        
Which are the various characteristics of review
functions influencing consumer purchasing decisions?

·        
Which review function characteristics can be
found on what platforms?

·        
What online consumer review platforms consumers
choose to use as a basis for their purchasing decision?

·        
Which review functions do consumers classify as
most important with regard to their purchasing decision?

 

Definition of
Terms

·        
Online
Reviews: A message or an opinion from stranger on online platform related
to a product or service.

 

CHAPTER 03: RESEARCH EMTHODOLOGY

Research Paradigm

A research
paradigm is defined as the strategy and the area for investigation thus, the
research carried out in this paradigm is. Conviction over the methods of data collection for the research question
is called research paradigm or research philosophy. The two main type of
research philosophies are a) interpretive
and b) positivism. In this
research, the approach used for conducting the analysis would be quantitative
as according to research questions. For the purpose of data collection Survey
questionnaire is designed to answer the research questions (Denzin, 2007). The
study explore the research questions through distributing survey questionnaire
among the respondents. The research is deductive in nature and explore the
insights from respondents through these surveys which aids in identifying the
impact of product reviews on purchase intention.

Research Philosophy

Conviction over the methods of data
collection for the research question is called research paradigm or research
philosophy. The two main type of research philosophies are a) interpretive and b) positivism.  Both of the two
philosophies have their own use based on the scope and research questions.
Positivism focuses on interpretation through reasoning and logics based on some
mathematical technique and it can be described from an objective viewpoint
without prying understudy fact. Similarly, interpretive philosophy is of the
view that, to understand the reality in complete sense it is needed that
reality is seen through a subjective intervention (Bryman, 2011).
For this research positivism i.e. critical realism is selected because, the
results are derived with help of statistical tests that provides clear evidence
of determining the relationships.

 

Research Approach

The concept of
research strategy is a field of study in which researcher intends to develop a
concept generalizability of the research findings. There are majorly two kind
of research approaches a) deductive and b) inductive (Bryman, 2007). According
to Creswell (2007) A deductive research approach is one in which emphasis is
given on testing an already defined theory with the help of hypothesis whilst
an, inductive approach is used when a new theory. Keeping in view, our research
follows a deductive approach. In this approach, we intend to develop hypothesis
based on the extracts from literature review for impact of product reviews on
consumer buying decision. Similarly, in order to understand the impact of
product reviews on buying decision of consumer, descriptive method will be
used. A descriptive research method aids in determining the impact of product
reviews on restaurant industry through social media and different forums, as it
plays a major role in customer selection and buying decision.

Research Type

The research is
an explanatory investigation. An explanatory research design helps the
researcher to determine the major factors of study in detail. It is a study
which attempts to connect some ideas in order to understand the cause and
impact relationship among the variables. Therefore, the research is more
concerned with explaining the phenomenon of the research variables impacting
the buying decision of consumer. A primary research will help in determining
the factors which have stronger impact on altering the consumer buying
decision.

Research Methodology/
Technique

The research
scope suggest that, the research method for this study would be quantitative. The
main objective of this research is to find out and observe the impact of
product reviews on consumer buying decision therefore, it is required that,
some measurable results and facts would help to determine the case. Considering
the research scope, Quantitative research method will be the best fir
methodology. According to Creswell (2007) there are two main types of research
methodologies a) Qualitative method b) Quantitative method. A qualitative
research is one in which only characteristics of the research are defined while
a quantitative research is one in which, the results are interpreted in facts
and figures by using some statistical tests thus, for this research we are
using quantitative methodology i.e. using some statistical tests in order to
claim the results.

Data Collection & Sources

There are two
different methods for collecting the research data. First is the “Primary Data
Collection Method” and the second one is “Secondary Data Collection method”.
The data collection acts as a foundation for the research analysis.

The primary data
collection helps in acquiring the first hand information and it is suitable for
research surveys, questionnaire in which initial level information is required.
Similarly, the secondary data is also known as desk research in which, the data
is collected from previous researches, published records, statements etc.
(Creswell, 2009). The scope of this research is to determine the impact of
product reviews on consumer buying behavior which can be gathered with the help
of a survey questionnaire distributed among the respondents therefore, primary
method of data collection would be best fir, easy and less costly.

Population & Sampling

The research population
for this study is the consumers who came to restaurants of Karachi. The
population is irrespective of age and gender as people having different kind of
behavior when it comes to buying food products. The focus of this research is
on the food industry (restaurants) in residing in Karachi.

3.3.1 Sample
Frame

For this
research the population frame is the respondents or consumers who came to buy
food product in order to materialize this, we tend to focus on restaurants. The
target frame of this research is the restaurants residing in Karachi-Do Darya.
The survey questionnaire is consulted from the respondents having different
ages, gender, geographic location, income etc.

Sample Size

The sample size
for this research study includes 200 respondents gathered from the restaurants
location in Karachi Do-Darya. The respondents are selected on the basis of
simple random sampling and respondents selected from each restaurant of target
sample frame. The sample of the respondents is based on 95% confidence interval
considering an error percentage of 10%.

Sampling Method

The sampling
technique for this research is Simple random sampling. According to Creswell,
(2009) a simple random sampling technique is one in which every respondent
possess an equal opportunity of being selected.

Conceptual Framework

                 IV                                                                                             
DV

 

 

 

Hypothesis

H1: There is significant impact of online reviews on
developing consumer trust

H2: There is significant impact of online reviews on
changing consumer perceptions about a product

 

Data Analysis

The data for
this research si analyzed with the help of SPSS. The version used for SPSS is
22 and the tests include Pearson moment correlation and Regression analysis.
According to Bryman (2011) The Pearson correlation helps in determining the
relationship between the variables however, the regression helps in determining
the model and variables significance.