The effect of recommendation sources and consumer involvement on trust and purchase intentions in online and offline environments

Chiun-Sin Lin1, Gwo-Hshiung Tzeng2,3, Yang-Chieh Chin11, Chiao-Chen Chang4

Department of Management Science, National Chiao Tung University 1001, Ta-Hsueh Road, Hsinchu 30010, Taiwan. +886-3-571212 ext 57101 (Tel); Email: netec7@yahoo.com.tw; jerry110888@gmail.com Department of Business and Entrepreneurial Management, Kainan University, No.1, Kainan Rd., Luchu, Taoyuan, 338, Taiwan; Institute of Management of Technology, National Chiao Tung University 1001, Ta-Hsueh Road, Hsinchu 30010, Taiwan +886-3-3412456 (Tel); Email: ghtzeng@mail.knu.edu.tw; ghtzeng@cc.nctu.edu.tw Department of International Business, Department of International Business, National Dong Hwa University; No.1, Sec. 2, Da Hsueh Rd., Shoufeng, Hualien 97401, Taiwan +886-3-8635000 (Tel); Email: aka.ms93g@nctu.edu.tw

Abstract This research examines the influence of recommendation sources and consumer involvement on consumer decision-making during online and offline shopping experiences. Evidence from a randomized experiment suggests that the three recommendation sources (word-of-mouth, advertising and expert recommendation) have positive impacts on consumers perceived trust in the recommendation and purchase intentions, irrespective of online and offline environments. Findings also suggest that the effect of WOM and expert recommendation on purchase intentions, when combined with high consumer involvement, is stronger online than offline, while the interplay of advertising with high consumer involvement has a weaker effect on purchase intentions online than offline. Consumer preferences for recommendation sources may depend on whether the consumer is shopping online or offline. As such, marketers must consider a number of factorsincluding recommendation characteristics, consumer involvement, and shopping environment in order to provide consumers with the appropriate type of recommendations for their decision-making tasks. Implications for marketers are also discussed in this study. Keywords: Recommendation source; Shopping medium; Consumer involvement; Trust; Purchase intention

1. Introduction

A recommendation source that matches consumer-specified criteria to the product assortment offered by the merchant can help consumers reduce perceived risks and save time when they are considering a wide variety of alternatives. Duhan et al. (1997) classified recommendation sources as strong-tie sources (e.g., friends and family) and weak-tie sources (e.g., acquaintances or strangers). Extant research has demonstrated clearly the importance of recommendation sources in the buying process and how they help consumers determine alternatives in a traditional store environment. However, with the rapid growth of e-commerce, consumers purchase intentions are increasingly made in computer-mediated environments, often different
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Correspondent author: 1

from the benefit of traditional sources of recommendation. Senecal and Nantel (2002) sorted online recommendation sources into three broad categories: (1) other consumers (e.g., relatives, friends and acquaintances), (2) human experts (e.g., salespersons, independent experts), and (3) expert systems such as recommendation systems. Senecal and Nantel (2004) confirmed that consumers are influenced in their online product choices by online recommendations. Therefore, whether in a traditional store environment or online, it is important to understand the role of recommendation sources on consumers decision-making process and the links between online and offline media. Trust is an important antecedent of the intention to buy and is the basis of behaviors that demonstrate dependence on others, such as accepting others advice (McKnight et al., 2002). Recommendation sources could help build consumers trust in specific products (Gershoff et al., 2003) and, if recommendation sources aid effective decision-making in the purchase process, the consumer will be more likely to trust the recommendation. Consequently, trust is expected to be a significant mediator between recommendation sources and purchase intentions. Accordingly, the main objective of this study is to investigate the influence of recommendation sources on consumers trust in the recommendation and on their purchase intentions with high or low consumers involvement. No study has specifically investigated and compared the relative influence of recommendation sources on purchase intentions in online and offline environments, so we also explore the role of different store media in the relationship between recommendation sources and purchase intentions.

2. Review on trust and purchase intentions in online/offline shopping

[5~10 lines of literature review on trust and purchase intentions in online/offline shopping for building the Relationships between recommendation source and trust (purpose). Contents 2.1. Online/offline shopping media An issue of particular interest to both practitioners and academics is whether there are systematic differences in consumer choice behavior between online and offline stores and, if there are such differences, the reasons for them (Degeratu et al., 2000). Incontrovertibly, online and offline channels present different shopping experiences, even when the same products are purchased (Wolfinbarger and Gilly, 2001). Thus, it is important to examine and compare the differences and similarities between online and offline services so online and offline service providers can gain their customers confidence and dollars (Harris et al., 2006) and understand the differences in online and offline purchase intentions. 2.2. Purchase intentions Purchase intention is defined as the likelihood of consumers buying the product (Fishbein and Ajzen, 1975). Whitlark et al. (1993) further indicated that purchase intention is the purchase probability associated with an intention category measured against the percentage of individuals that will actually buy the product. Past research has indicated that, in information-intensive environments, consumers may seek others opinions as a way to manage the perceived risks typically associated with cognitively demanding tasks (Dowling and Staelin, 1994). That is, consumer purchase intentions often require reliance on various information sources. 2.3. Trust Prior research in this area has made significant progress toward understanding the importance of trust (Johnson, 2007). For example, Whitener et al. (1998) defined trust holistically as possessing three components: trust reflects expectation or conviction of
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there being good will behind the counterparts anticipated action; counterparts cannot force or control this conviction; and one believes that ones performance depends on the actions of the counterpart. In online environments, online trust plays an increasingly important role in influencing consumers attitudes and purchase intentions as online shopping increases in popularity and convenience. According to Shankar et al. (2002), The importance of online trust has gone up over the recent past as customers now have more options and information on the Web, making it critical for firms to earn and retain the trust of their current or potential customers (p. 2). Thus, trust is an important antecedent of intentions and behaviors that demonstrate dependence on others, such as accepting others advice (McKnight et al., 2002). Researchers have suggested that in the early stages of computer use, trust may have been related more to a consumers perception of the technology itself, where higher levels of trust in the site yielded higher online purchase intentions (Yoon, 2002), online trust affected consumers willingness to make a purchase (Bart et al., 2004). Therefore, we conceptualize consumers trust as the central construct that mediates the influence of recommendation sources on the consumers purchase decision. While a number of studies have reaffirmed the direct correlation between recommendation sources and purchase intentions, that correlation may be disrupted through the mediator of trust (Smith et al., 2005). Thus, it is important to investigate the mediating effects of consumers trust on purchase intentions or decisions regarding purchases made online or offline. Although there are differences in the role of trust between online and offline trust, there may be little disagreement as to the fundamental importance of trust, whether online or offline, in its impact on consumers purchase decisions (Yoon, 2002). Even although past research has found a link between media preference and trustworthiness (Rimmer and Weaver, 1987), few researchers have investigated how consumers compare recommendation sources from traditional media and online media. Because this study deals with the dual behavioral outcomes of purchase intentions, the following research hypotheses incorporate this relationship: H1: The greater the trust in the recommendation, the greater the purchase intentions. 2.4. Consumer involvement Consumer involvement is the degree of a consumers mental and physical effort in decision-making (Beharrell and Denison, 1995; Laaksonen, 1993). Involvement has been shown to exert a considerable influence on consumers purchase decision processes for products in general (Laurent and Kapferer, 1985a, 1985b), but the specific level of involvement is related to product, advertising, message, program, and situation (Petty and Cacioppo, 1981; Laurent and Kepferer, 1985a, 1985b), as well as behaviors like purchase and response (Bloch and Richins, 1983; Slama and Taschian, 1985). Products that are high priced, have complex features, and have high perceived risk also have high involvement levels; and products that are low priced, have simple features and have low perceived risk have low involvement levels (Jain and Sharma, 2002). Although involvement can exist at various levels, Finn (1983) argued that the level of motivation to become involved in a purchase results from product attributes and relatedness of the product to the consumers psycho-social needs and wants. Motivation points to the consumers interest in acquiring product information from various sources (Pedersen and Nysveen, 2003), so consumer involvement has been found to exert a considerable effect on consumer purchase intentions (Lockshin et al., 2001). 2.5. Recommendation source Research has indicated that consumers may seek others opinions to assist in
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decision-making and reduce the perceived risks (Dowling and Staelin, 1994). Consumers consider recommendation sources to be primarily information sources, and some information sources can have a notable influence on a consumers decisionmaking process. Following Andreasens typology (1968), information sources include: (1) impersonal advocate sources (e.g., mass media), (2) impersonal independent sources (e.g., Consumer Reports), (3) personal advocate sources (e.g., sales clerks), and (4) personal independent sources (e.g., friends). On the other hand, Cox (1967) categorized information sources into three categories: consumerdominated sources, marketer-dominated sources, and neutral sources. While marketerdominated sources (e.g., packaging, promotion, and advertising) were controlled by the marketer, consumer-dominated sources refer to interpersonal informational channels over which the marketer has little control. Neutral sources (e.g., expert recommendation, consumer reports, and newspapers) are not controlled by the marketer or by the consumer. For his part, Midgley (1983) suggested three categories, proposing that consumers tend to rely on a small subset of all available information sources (personal, neutral, and advertising) (p. 74). This study extends the literature to discuss the marketer-dominated sources (e.g., The sellers advertising suggests this product), consumer-dominated sources (e.g., My friends says that this product is best for me), and neutral sources (e.g., A renowned expert says that this product is the best) in trust and purchase intentions. 2.6. Relationships between recommendation source and trust When consumers are motivated to adopt a recommended product because of a desire to reduce the amount of effort they exert during the decision-making process, their subjective feeling of being influenced by the recommendation may depend on whether they trust the recommendation, which trust may depend on specific recommendation characteristics (Smith et al., 2005). In other words, the source and type of a recommendation can affect a consumers trust (Smith et al., 2005). 2.6.1. Word-of-Mouth (WOM) Word-of-mouth (WOM) is face-to-face (or email to email or text to text) communication about products or companies between people who are not commercial entities (Arndt, 1967; Carl, 2006). WOM can come from friends, relatives, colleagues, and acquaintances (Kuan and Bock, 2007). Westbrook (1987) broadly described WOM to include all informal communications directed at other consumers about the ownership, usage, or characteristics of particular goods and services or their sellers (p. 261). Herr et al. (1991) indicated that consumers may prefer to rely on WOM information, rather than on information about product attributes. We assume that positive WOM may lead to the trust and purchase intentions. Since the interplay of the medium and involvement may occur in the relationships between WOM and purchase intentions, we hypothesize that: H2a: Positive WOM will have a positive effect on trust. H2b: Positive WOM will have a positive effect on purchase intentions. H2c: The interaction of on-/offline media and consumer involvement will affect on the relationship between WOM and purchase intentions. Specifically, the effect of WOM on purchase intentions will be greater in the online medium with high consumer involvement than in the offline medium with low consumer involvement. 2.6.2. Advertising Advertising is the nonpersonal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media (Bovee, 1992, p. 7). Marketers use traditional advertising methods (e.g., Yellow Pages advertising, newspaper, magazine
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advertising) to promote their businesses, products and services. Furthermore, the internet is an emerging medium that has grown within an environment of increasing demand for accountability, and online advertising has become an increasingly important component of the marketing and sales strategies of many businesses (Borgs et al., 2007; Havlena and Graham, 2004). Online advertising is the use of the internet as an advertising medium, where promotional messages appear on a computer screen. For businesses, online advertising, such as through maintenance of a webpage, offers many potential benefits that are not available through traditional advertising media (Kanso and Nelson, 2004). In addition, the effect of online advertising could often be more appealing than offline advertising for consumers purchase process. Nonetheless, few studies have compared how online and offline advertising affects consumers trust and product choices. Effective advertising, whether online of offline, can help service providers get more exposure and more sales, but it may also lead to increased trust and purchase intentions. Therefore, we also investigate the interactions of the medium and consumer involvement on trust and purchase intentions and hypothesize that: H3a: Effective advertising will have a positive effect on trust. H3b: Effective advertising will have a positive effect on purchase intentions. H3c: The interaction of on-/offline media and consumer involvement will affect the relationship between advertising and purchase intentions. Specifically, the effect of advertising on purchase intentions will be greater in the online medium with high consumer involvement than in the offline medium with low consumer involvement. 2.6.3. Expert recommendation Expert recommendation exploits detailed heuristics and social interactions to recommend sources of expertise in an organizational environment (Mcdonald and Ackerman, 2000). Crisci and Kassinove (1973) suggested that perceived level of expertise and strength of advice positively influence compliance with source recommendations. In addition to examining the main effect of expert recommendation, then, we also consider the interactions of the medium and consumer involvement on purchase intentions and hypothesize that: H4a: Expert recommendation will have a positive effect on trust. H4b: Expert recommendation will have a positive effect on purchase intentions. H4c: The interaction of on-/offline media and consumer involvement will affect the relationship between expert recommendation and purchase intentions. Specifically, the effect of expert recommendation on purchase intentions will be greater in the online medium with high consumer involvement than in the offline medium with low consumer involvement.

3. Methods

3.1. Experimental design and procedures A 2 (shopping medium: online vs. offline) 2 (consumer involvement level: high vs. low) 3 (recommendation source: WOM, advertising, and expert recommendation) between-subjects experiment was conducted (Fig. 1). To fully understand the differences in purchase intentions induced by the shopping medium, we would need to conduct a randomized experiment in which some people are assigned to shop online and some are assigned to shop offline. Thus, we controlled for respondents previous online experience, as suggested by Shankar et al. (2003). Next, two involvement level products were selected: a computer notebook (high involvement) and shampoo (low involvement). These products were selected because
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they have a wide usage rate, so their inclusion helps to reduce non-response. The three recommendation sources, WOM, advertising, and expert recommendation were used in the scenarios.

On-/Offline Medium Consumer Involvement

Recommendation Source Word-of-Mouth Trust in the Recommendation Purchase Intentions

Advertising

Expert Recommendation

Fig. 1. Conceptual model. Take in Fig. 1 Here The participants in the experiment were students in consumer behavior courses at a university in northern Taiwan. Six hundred students, consisting of both males and females, voluntarily signed up to participate to receive extra credit in consumer behavior courses. Each subject was randomly assigned to one of the twelve treatment conditions, so 50 subjects participated in each treatment condition. After reading the scenario descriptions, the respondents were asked to indicate the recommendation source they would normally consult during the purchase process, and to indicate their perceived trust in the recommendation and purchase intentions. The students average age was 21, they were all business administration majors, and all used the Web on a regular basis for both entertainment and research. 3.2. Measures and manipulations 3.2.1. Stimuli We manipulated the shopping media (online vs. offline) and consumer involvement levels (high-involvement vs. low-involvement) by presenting four different choice scenarios. In the online shopping with high level of involvement condition, subjects were asked to imagine that they were browsing a shopping website and selecting a computer notebook. In the offline shopping with high level of involvement condition, subjects were asked to imagine that they were selecting a computer notebook in a traditional store. In the online shopping with low level of involvement condition, subjects were asked to imagine that they were selecting a shampoo on a retail website. In the offline shopping with low level of involvement condition, subjects were asked to imagine that they were selecting a shampoo in a
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traditional store. 3.2.2. Measures All items scales in this survey were measured on a five-point Likert-type scale, with anchors ranging from strongly disagree (1) to strongly agree (5). The higher scores represented higher trust in the recommendation or higher intention to purchase. The trust scale was adapted from the measurement defined by Smith et al. (2005) and consisted of three items. The purchase intention was measured using a three-item scale from Whitlark et al. (1993) (see Appendix). The experimental results showed the reliability of the measurement scale; the Cronbachs alpha for the trust and purchase intentions dimensions were 0.88 and 0.80, respectively, indicating that, in general, the internal consistency reliability of survey instruments was considered.

4. Results

4.1. Manipulation checks We tested whether consumers found the situation realistic, selecting a five-point Likert-type scale (1 = strongly disagree, 5 = strongly agree) (Dabholkar and Bagozzi, 2002) and asking respondents to rate whether (1) the situation described was realistic and (2) they had any difficulty imagining themselves in the situation. The results showed that respondents had no difficulties with realism or with imagining themselves in the given situation, with ratings of M = 4.15 and M = 4.54 for the two items, respectively. Thus, subjects strongly felt that the scenario they read could appear during the shopping process. The manipulation checks showed that the manipulation of the review valence was effective. 4.2. Hypothesis testing To examine the mediating effects of perceived trust in the recommendations among the effect of the shopping medium, consumer involvement, recommendation sources and purchase intentions, we used equation (1) for regression analysis: Y = 0 + 1M + 2 I + 3 R + 4T + e , (1) where Y is the purchase intention, M is the shopping medium, I is the consumer involvement, R is the recommendation source, T is trust, and e is the error term. The results, as shown in Table 1, indicate that coefficient 4 was significant in predicting consumers purchase intentions ( = 0.35, p < 0.001). Trust in the recommendation mediates the relationship between shopping medium, consumer involvement, recommendation sources and purchase intentions. The F test for the R 2 increment between the reduced model and the full model pointed out the 2 2 significant effects of trust ( Rreduced = 0.75, R full = 0.78, F1,593 = 422.07, p < 0.001). Therefore, the observed level of significance for the value of the increment was 0.03, supporting H1. The comparison regression results of the reduced model and the full model are presented in Table 1, which shows that the explanatory power of the model may be considered satisfactory ( R 2 = 0.78) and indicates that the model fits the data and is appropriate for testing the hypothesis. Take in Table 1 Here To demonstrate the main effect between recommendation sources and trust, we conducted ANOVA analysis. As shown in Table 2, WOM, advertising and expert recommendation have positive main effects on trust in the recommendation ( F( 2,597 ) = 716.14, p < 0.001), in support of H2a, H3a and H4a, respectively. This analysis also revealed a positive relationship between recommendation sources and purchase intentions ( F( 2,597 ) = 465.49, p < 0.001), supporting H2b, H3b and H4b. Take in Table 2 Here
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H2c hypothesizes that the interaction between recommendation sources and the on-/offline medium affects purchase intentions; the data show a significant interaction effect ( F( 2,597 ) =16.24, p < 0.001) where the effect of WOM on purchase intentions is greater in the online medium than in the offline medium for both high-involvement and low-involvement products (Table 3). Therefore, H2c was supported. For a graphical representation of these contrasts, see Fig. 2. Take in Table 3 Here Take in Fig. 2 Here The results also indicated that the main effect of advertising and expert recommendation on purchase intentions is also greater in the online medium than in the offline medium for both high-involvement and low-involvement products; the coefficients of these variables are statistically significant ( p < 0.001) and have the expected signs (Fig. 3 and Fig. 4). Therefore, H3c and H4c were supported. Take in Fig. 3 Here Take in Fig. 4 Here

5. Discussion and implications

This investigation examined how recommendation sources influence consumers trust in the recommendation and purchase intentions. In general, the analytical results showed that all recommendation sourcesWOM, advertising and expert recommendationpositively influence consumers trust in the recommendation and purchase intentions. Further, the main effects of WOM, advertising and expert recommendation, are more significant on purchase intentions in the online medium than on those in the offline medium. One reason for this finding may be that online consumers are more likely to search actively for cues, such as decision aids and comparison agents, which can assist them in preserving their cognitive resources (Jacso, 1998; Todd and Benbasat, 1992, 1999). In addition, WOM influenced subjects purchase intentions more than advertising and expert recommendation did. This result is consistent with Brown and Reingens (1987), which suggested that WOM communication plays an important role in shaping consumers attitudes and behavior. The main effect of WOM on trust and purchase intentions is greater than that of advertising and expert recommendation, which is in congruence with Engel, Blackwell, and Kegerreis (1969) and Katz and Lazarsfeld (1955), who indicated that WOM has greater influence on consumer behavior than print ads, personal selling, and radio advertising under certain circumstances. The findings from this research indicate an opportunity for marketers in exploiting the power of crowds. For example, online marketers can encourage positive WOM to help create a positive impression among potential consumers. Companies can also design recommendation activities where consumers who recommend products to others are rewarded. However, the effect of advertising on purchase intentions in the online medium is greater than that in the offline medium, indicating that when consumers order products online, they may be simultaneously stimulated by the advertisements. The lagged effects of online advertising (e.g., banner ads) were lower than those of traditional advertising (e.g., radio, television, cable and magazines) (Bucklin, 2008). Consumer involvement has been conceptualized as certain cognitions or passing interest (Gabbott and Hogg, 1999) that consumers exhibit towards the selection of
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products. A consumers involvement will influence his or her trust and purchase intentions, especially when the consumer is considering a high-involvement product in an online medium. The result was consistent with Martin (1998), who suggested that high-involvement products decrease consumers sense of control and reinforce uncertainty when they exercise their purchase choices. Similarly, consumers cannot usually ask a salesperson about product information if they shop online, so consumers encounter more uncertainty (e.g., merchandise must be shipped to the consumer, introducing a significant delay and uncertainty about whether or not the item is actually in stock at the time of purchase) in the online medium than in the offline medium, so their purchase intentions could be significantly affected by recommendations. In other words, the influences of recommendation sources may be robust in the online shopping medium because consumers face more uncertainty. This finding is in keeping with Smith, Menon and Sivakumar (2005), who concluded that, given the unique challenges of online environments, consumers generally associate a greater level of risk with online shopping experiences than with traditional retail settings. 5.1. Limitations and future research Although our research findings contribute to the practice of marketing, our study is also characterized by several limitations that may provide opportunities for future research. One limitation of this study is that our experiment is scenario-based and did not occur in a field setting. Although a realism check showed that respondents found the scenarios believable, a pencil-and-paper experiment may not fully represent the shopping situations that exist in the field. Using scenarios, it is not possible to capture all of the nuances an actual customer encounters in the field, so it may be difficult for respondents to predict their perceptions of trust and purchase intentions in these hypothetical situations. Another limitation is that our study is limited to one industry and the customer base of one country. Further research is needed in order to examine differences in the effects of consumer characteristics across industries and cultures.

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5 4 2 3 0 1 2. Effects of WOM by medium and involvement. Fig. Offline Online

Low Involved High Involved

5 4 2 3 0 1 3. Effects of advertising by medium and involvement. Fig. Offline Online

Low Involved High Involved

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5 4 2 3 0 1 4. Effects of expert recommendation by medium and involvement. Fig. Offline Online

Low Involved High Involved

Table 1 Results of regression analysis examining the influence of trust related on purchase intentions (Comparison between the reduced model vs. the full model). Independent variable Coefficient Purchase intention Reduced model Full model p Value p Value Intercept 3.39 .000*** 2.15 .000*** 0 Shopping Medium 0.30 .000*** 0.24 .000*** 1 Involvement Level 0.23 .000*** 0.16 .000*** 2 Recommendation 0.07 .000*** 0.01 .014*** 3 Source Trust 0.35 .000*** 4 F-value 451.39 .000*** 422.07 .000*** 2 0.752 0.781 R 0.751 0.779 Adjusted- R 2 p p p * < 0.05; ** < 0.01; *** < 0.001.

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Table 2 Main effects of recommendation sources. Recommendation sources WOM Ads Expert ( n =200) ( n =200) ( n =200) Trust 4.28 3.08 3.56

F value ( p value) 716.14 (0.00) Purchase intentions 4.35 3.17 3.71 465.49 (0.00) Notice: Mean value on a 5-point scale, where 1 indicated strongly disagree and 5 indicated strongly agree. * p < 0.05; ** p < 0.01; *** p < 0.001.

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Table 3 Interaction effects of recommendation source by medium and involvement. Experimental condition Online High-involvement WOM Ads Expert ( n =50 ( n =50 ( n =50) ) ) 4.99 3.29 3.93 Low-involvement WOM Ads Expert ( n =50 ( n =50 ( n =50) ) ) 4.34 3.21 3.79

Offline Low-involvement WOM Ads Expert ( n =50 ( n =50 ( n =50) ) ) 3.85 2.91 3.50

F value ( p value)

Purchase intentions

High-involvement WOM Ads Expert ( n =50 ( n =50 ( n =50) ) ) 4.19 3.19 3.62

16.24 (0.00)

Notice: Mean value on a 5-point scale, where 1 indicated strongly disagree and 5 indicated very agree. * p < 0.05; ** p < 0.01; *** p < 0.001.

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Appendix

Measurement Trust 1. I trust the WOM/advertising/expert recommendation such that, if I were unable to make this decision, I would follow the recommendations to choose a product for me. 2. I have confidence in the WOM/advertising/expert recommendation. 3. I relied on the WOM/advertising/expert recommendation. Purchase intentions 1. I would be willing to purchase at the store/website. 2. It is very likely that I would purchase at the store/website. 3. The probability that I would purchase at the store/website is very high.

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