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Business Research Methods

Research: Customer's Purchasing Intention based on Review Credibility in


the Context of Amazon

Submitted to – Dr. Bikramjit Rishi

Submitted By-
Aditya Choudhary- MBA182003
Bishwajeet Pradhan- MBA182007
Chetan Pandey- MBA182009
Siddharth Sharma – MBA182022
Marie Formhals- TRF191009
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Table of Contents

Chapters Page Number

Introduction 3

Business Problem 3

Research Question/Problem 3

Literature Review and Identification of Concepts and 3


Construct

Conceptual Model 4

Identifying Research Objective 5-6

Research Methodology 6

Questionnaire 6-8

Testing the Data 9-13

Business Problem Interpretation 14

Recommendations 14

Conclusion 14

References 15

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Step I: Introduction
Company: Amazon
Amazon, is the largest ecommerce marketplace in the world, with a revenue of $239.2 billion. With over 606
million products sold via its website and smartphone application, Amazon sells all kinds of products ranging
from electronics to music and fashion. The number of individuals buying and selling their products online has
resulted in an enormous amount of online reviews of the product itself. It is therefore, almost inevitable that
many of these online reviews will be fake or false (either to benefit the product or it’s manufacturer or to
discredit their business).
Amazon is seen as the benchmark for the e-commerce industry and as the consumers who want to buy a
product, almost universally think of Amazon. As the customer reviews is one of the key components of the
decision-making process, the fake review that hinder or help a product sell has a huge impact on the industry
as a whole.
Studies have indicated that Fake reviews are increasingly prevalent across many top retailer websites.52
percent of reviews posted on Walmart.com are "inauthentic and unreliable," according to estimates. In the
case of Amazon, 30 percent of the reviews or more, are fake or unreliable. About a third of reviews on makeup
retailer Sephora and video-game service Steam are also unreliable or fake. These fake or inauthentic reviews
can do much to harm the brand image of companies like Amazon and destroy the trust and faith that customers
have in them. It thus becomes crucial for Amazon to combat these fake reviews before this business problem
overtakes them. (Henney, 2019)

Step II: Business Problem


Fake reviews have a very negative impact on the brand, as it makes the company lose credibility, and makes
customers feel cheated, and opens the company up to legal action. The business problem here is that amazon
must find a way to test the veracity and validity of online reviews on products being sold by them.

Step III: Research Question/Problem


How do customers view online reviews for products on amazon?

Step IV: Literature Review and Identification of Concepts and Construct.


Online reviews in a broader sense be a message or information regarding a product or service and thus like
any other information are subject to processes of human information processing. The ELM is an integrative
process model and is composed of two major routes through which individuals process persuasive messages:
a central route and a peripheral route of persuasion. Both routes may be triggered simultaneously in persuasion
processes and can vary in their intensity. The more cognitive effort an individual put into the processing and
evaluation of a message, the higher the elaboration intensity and vice versa.

While the central route is associated with a high level of elaboration and individuals’ concentration on the
argument quality of the message, the peripheral route involves a low level of elaboration, with individuals
focusing on simple peripheral cues. According to this, consumers can evaluate the credibility of online reviews
based on both central cues of argument quality and peripheral cues. Thus, when developing our research
model, we conceptualize the determinants of online review credibility as factors of argument quality and
peripheral factors, and assign them according to the respective dimension. (Thomas, Wirtz, & c, 2019)

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Conceptual Model

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Step V: Identifying Research Objective
The research objective is to understand the impact of the online review of a product on the customer purchasing
decision.
 REASEARCH QUESTION 1: To what extent does an accuracy of a product have an impact on the
Purchase intention?
HYPOTHESIS 1: There is a major impact of accuracy on Purchase intention.

 REASEARCH QUESTION 2: To what extent does a Completeness of a product have an impact on


the Purchase intention?
HYPOTHESIS 2: There is a major impact of Completeness on Purchase intention.

 REASEARCH QUESTION 3: To what extent does a Review Quantity of a product have an impact
on the Purchase intention?
HYPOTHESIS 3: There is a major impact of Review Quantity on Purchase intention.

 REASEARCH QUESTION 4: To what extent does a Review Expertise of a product have an impact
on the Purchase intention?
HYPOTHESIS 4: There is a major impact of on Purchase intention.
 REASEARCH QUESTION 5: To what extent does a Product Quantity of a product have an impact
on the Purchase intention?
HYPOTHESIS 5: There is a major impact of Product Quantity on Purchase intention.

 REASEARCH QUESTION 6: To what extent does a Review Credibility of a product have an impact
on the Purchase intention?
HYPOTHESIS 6: There is a major impact of a Review Credibility on Purchase intention.
Descriptive Hypothesis
Chi-Square
1) Income and Occupation: Null Hypothesis: There is no significant relationship between Income and
Occupation.
2) Age and Income: Null Hypothesis: There is no significant relationship between Age and Income.
3) Income and Occupation: Null Hypothesis: There is no significant relationship between Income and
Occupation.
4) Age and Occupation: Null Hypothesis: There is no significant relationship between Age and
Occupation.
Factorial ANOVA
1) Null Hypothesis: There is no impact of Income and Mode of Purchase on Customer’s Purchase
Intention.
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2) Null Hypothesis: There is no significant impact of Age and Income on Customer’s Purchase Intention.

Step VI: Research Methodology


Research Design: Mixed-Method
Questionnaire Design: Nominal and Interval Questions. 5 Point Likert scale.
Sample Size: 158 Respondents. 135 who use amazon and for whom the questionnaire was valid.
Non-Probability Sample.
Sampling Unit: Individuals

QUESTIONNAIRE

Dear Respondent,

This questionnaire has been designed to analyse how consumers view online reviews for products on amazon. The study
is being conducted by the students pursuing MBA program at IMT Dubai. This study is done only for the academic
purposes. The response shared by you will not be used for any other purpose. The participation in survey is voluntary
and there are no right or wrong answers. Please pick the choice you agree the most with. Kindly ensure that none of the
questions are missed and you answer them to the best of your knowledge.

Your participation is highly appreciated.

Thanks, and Regards


Academic Project Group -
IMT Dubai

QUESTIONS

Q 1: Do you make purchases online using ecommerce websites?


Yes
No
If Yes, continue to answer the questions otherwise return back the questionnaire.
Q 2: How often do you make online purchases?
 Weekly
 Monthly
 Annually

Q 3: How do you normally make purchases online?


 Website
 Phone application

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Review Accuracy
Code Statement 1 2 3 4 5
A1 Online reviews on Amazon are accurate.

A2 Online reviews on Amazon are thoroughly written.


A3 Online reviews on Amazon are correct
A4 Online reviews on Amazon are precisely formulated.

Completeness
Code Statement 1 2 3 4 5
C1 Online reviews on Amazon contain all the information needed about the
reviewed products
C2 Online reviews on Amazon contain very detailed information about the
reviewed products
C3 Online reviews on Amazon contain a variety of information about the
reviewed products/services
C4 Overall, online reviews on Amazon are comprehensive
Review Quantity
Code Statement 1 2 3 4 5
RQ1 There is a great number of reviews from different authors about many
products/services on Amazon
RQ2 There is a variety of reviews about many products/services on Amazon
RQ3 There is a multitude of information about many products/services on Amazon
RQ3 The number of online reviews about products/services on Amazon is high
Review Credibility
Code Statement 1 2 3 4 5
RC1 I think online reviews on Amazon are credible
RC2 I think online reviews on Amazon are factual
RC3 I think online reviews on Amazon are reliable
RC3 I think online reviews on Amazon are trustworthy
Product Rating
Code Statement 1 3 3 4 5
PR1 The rating of products on Amazon by means of stars has narrowed down the
number of alternative products that are interesting to me
PR2 The rating of products on Amazon by means of stars has allowed me to find
products that satisfy my needs
PR3 The rating of products on Amazon by means of stars has allowed me to find
well-rated products
PR3 The rating of products on Amazon by means of stars has allowed to me get a
quick overview of products
Reviewer Expertise
Code Statement 1 2 3 4 5
RE1 Reviewers of online reviews on Amazon seem to possess sufficient
knowledge
RE2 Reviewers of online reviews on Amazon seem to have enough insights to
make an assessment
RE3 Reviewers of online reviews on Amazon seem to be competent

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Purchase Intention
Code Statement 1 2 3 4 5
PI1 I intend to buy products about which I have read positive online reviews on
Amazon.
PI2 If somebody asks me for advice on buying a product, I would recommend
products about which I have read online reviews on Amazon
PI3 As matter of principle, I inform myself before buying a product with the help
of online reviews on Amazon
PI4 In the future, I will buy products about which I have read online reviews on
Amazon

Personal Profile

Question 1: What is your gender?

 Male
 Female

Question 2: What is your income per month?

 Less than AED 20,000


 AED 20,000 to 50,000
 AED 50,000 to 70,000
 AED 70,000 to 90,000
 More than AED 90,000

Question 3: What is your age?

 Less than 18
 18 to 25
 26 to 35
 35 to 45
 Greater than 45

Question 4: What is your current occupation?

 Student
 Office worker
 Entrepreneur
 Unemployed
 Others (please specify__________)

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Step VII: Testing the Data
Chi-Squared Test- This test will help us establish the relationship of a nominal factor
with another nominal factor.
1) Income and Occupation:
Null Hypothesis: There is no significant relationship between Income and Occupation.

Significance Level: 0.000


Since significance level is less than 0.05, null hypothesis is rejected, which states that there is a significant
relationship between Income and Occupation of the respondent.

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)

Pearson Chi-Square 57.657a 16 .000


Likelihood Ratio 56.416 16 .000
Linear-by-Linear Association 6.898 1 .009
N of Valid Cases 135

a. 20 cells (80.0%) have expected count less than 5. The minimum expected count
is .09.

Table 1

2) Age and Income: -


Null Hypothesis – There is no significant relationship between Age and Income.

Significance level is - .000


Since significance level is less than 0.05, null hypothesis is rejected, which states that there is a significant
relationship between Age and Income of a respondent.

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)

Pearson Chi-Square 107.986a 16 .000


Likelihood Ratio 56.893 16 .000
Linear-by-Linear Association 30.499 1 .000
N of Valid Cases 135

a. 21 cells (84.0%) have expected count less than 5. The minimum expected count
is .09.

Table 2

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3) Occupation and Method of Purchase: -
Null Hypothesis – There is no significant relationship between Occupation and Medium of
Purchase.

Significance level is - .664


Since significance level is more than 0.05, null hypothesis is accepted, which states that there is no significant
relationship between Occupation and the Method of Purchase.

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)

Pearson Chi-Square 2.394a 4 .664


Likelihood Ratio 2.998 4 .558
Linear-by-Linear Association .515 1 .473
N of Valid Cases 135

a. 5 cells (50.0%) have expected count less than 5. The minimum expected count
is .77.

Table 3

4) Age and Occupation:


Null Hypothesis: There is no significant relationship between Age and Occupation.
Significance Level is - .000
Since significance level is less than 0.05, null hypothesis is rejected, which states that there is no significant
relationship between Age and Occupation.

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)

Pearson Chi-Square 78.747a 16 .000


Likelihood Ratio 74.707 16 .000
Linear-by-Linear Association 48.192 1 .000
N of Valid Cases 135

a. 19 cells (76.0%) have expected count less than 5. The minimum expected count
is .12.

Table 4

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Factorial ANOVA – Tests relationship between 2 or more independent variables
(nominal) and one dependent variable (interval).

1) We will take two independent variables Income and Mode of Purchase.


Null Hypothesis: There is no impact of Income and Mode of Purchase on Customer’s Purchase
Intention.

Tests of Between-Subjects Effects


Dependent Variable: PurchaseIntention

Source Type III Sum of df Mean Square F Sig.


Squares

Hypothesis 254.030 1 254.030 148.258 .102


Intercept
Error 1.235 .721 1.713a
Hypothesis 6.938 4 1.734 .899 .555
Income
Error 6.058 3.139 1.930b
Hypothesis 1.807 1 1.807 1.444 .283
MoP
Error 6.342 5.070 1.251c
Hypothesis 6.146 3 2.049 3.754 .013
Income * MoP
Error 68.761 126 .546d

a. .475 MS(Income) + 1.048 MS(MoP) - .478 MS(Income * MoP) - .045 MS(Error)


b. .921 MS (Income * MoP) + .079 MS(Error)
c. .469 MS (Income * MoP) + .531 MS(Error)
d. MS(Error)

Table 5

Interpretation: Since significance level of Income and Mode of Purchase is above 0.05, so they
individually will not affect the Customers Purchase Intention, but together they do affect it.

2) Age and Income.


Null Hypothesis: There is no significant impact of Age and Income on Customer’s Purchase Intention.

Tests of Between-Subjects Effects


Dependent Variable: PurchaseIntention

Source Type III Sum of df Mean Square F Sig.


Squares

Hypothesis 336.942 1 336.942 272.972 .002


Intercept
Error 2.833 2.295 1.234a
Hypothesis 7.666 4 1.916 1.825 .216
Income
Error 8.580 8.170 1.050b
Age Hypothesis 2.837 4 .709 .693 .616

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Error 8.820 8.622 1.023c
Hypothesis 7.552 6 1.259 2.382 .033
Income * Age
Error 63.411 120 .528d

a. .705 MS(Income) + .938 MS(Age) - .606 MS(Income * Age) - .037 MS(Error)


b. .715 MS (Income * Age) + .285 MS(Error)
c. .677 MS (Income * Age) + .323 MS(Error)
d. MS(Error)

Table 6
Interpretation: Since significance level of Age and Income is above 0.05, so they individually will
not affect the Customers Purchase Intention, but together they do affect it.

Regression
Regression discusses the impact of one or more variables on other variables. It is an advanced technique as
compared to Correlation. Regression follows three assumptions:
Correlation is an Interdependence technique. Regression is a dependent technique.
Regression Analysis – Widely used for Prediction and Forecasting.
 Dependent – Purchase Intention
 Independent – Accuracy, Completeness, Review Quantity, Review Credibility, Product Rating,
Reviewer’s Expertise.

Coefficients
Model Unstandardized Coefficients Standardized t Sig.
Coefficients

B Std. Error Beta

(Constant) .253 .322 .785 .434

Accuracy .148 .106 .131 1.393 .166

Completeness .076 .108 .077 .699 .486

1 ReviewQuantity .118 .098 .104 1.203 .231

ReviewCredibility .041 .121 .036 .339 .735

ProductRating .483 .099 .427 4.902 .000


ReviewerExpertise .087 .099 .080 .875 .383

a. Dependent Variable: PurchaseIntention

Table 7
Null Hypothesis of Regression – There is no impact of Accuracy, Completeness, Review Quantity, Review
Credibility, Product Rating and Reviewer Expertise on Purchase Intention.

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Interpretation of Charts – Normal Distribution chart is to explain assumption for normality.

Regression chart – To explain the assumption of Linearity

Interpretation –
- Since significance level of Accuracy, is more than 0.05, hence null is accepted, which states that there is no
impact of these factors on Purchase Intention.
- Since significance level of Completeness, is more than 0.05, hence null is accepted, which states that there is
no impact of these factors on Purchase Intention.
- Since significance level of Review Quantity, is more than 0.05, hence null is accepted, which states that there
is no impact of these factors on Purchase Intention.
- Since significance level of Review Credibility, is more than 0.05, hence null is accepted, which states that there
is no impact of these factors on Purchase Intention.
- Since significance level of Reviewer Expertise, is more than 0.05, hence null is accepted, which states that
there is no impact of these factors on Purchase Intention.
- Since significance level of Product Rating is 0.000, which is less than 0.05, hence, null hypothesis will be
rejected, which means that there is an impact of Product Rating on Purchase Intention. One unit change in the
value of Product Rating is being impacted by 48.3% change in Purchase Intention.
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Business Problem Interpretation:

As seen from the calculation in the above tables, the only significant impact on the customer’s purchase intention
on Amazon is being done by product rating, by way of the start a product has. In the other areas the company has
huge potential to increase the accuracy of the reviews as well as increase the expertise of the reviewer.

Recommendations:

1) The company can only allow the customers who have actually bought the products to review them, this in turn
will allow genuine reviews of the product that the others can use to decide whether to buy the product or not
as seen in Table 7, where the significance level is high on accuracy.
2) They can increase the scope of product ratings and improve the user interface of the website/app to allow easier
access to sort and filter products according to their ratings. As seen on Table 7.
3) Amazon can ask experts of different industries to come and review the products, that will allow customers to
get the experts opinion as well as their own peers/consumers.
4) There can be an algorithm made to weed out reviews made by bots, as accuracy is the second most factor that
affects the customer’s purchase intention.

Conclusion:

Seeing all this data and reviewing the recommendations, we can conclude that the company Amazon should
take note of the product rating and make the website and app on the phone so that the product rating can be
used as a filter to weed out products. There can be an algorithm made to weed out reviews made by bots, as
accuracy is the second most factor that affects the customer’s purchase intention.

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References

Henney, M. (2019, April 07). FoxBusiness. Retrieved from FoxBusiness: https://www.foxbusiness.com/retail/amazon-


fake-customer-reviews-headphones-technology

Thomas, M.-J., Wirtz, B. W., & c, W. J. (2019). DETERMINANTS OF ONLINE REVIEW CREDIBILITY AND ITS IMPACT ON
CONSUMERS' PURCHASE INTENTION. Journal of Electronic Commerce Research, 1-20.

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