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Asian
Journal of Business Research
Volume 1 Number 2 2011
Editorial i
Kim-Shyan Fam, Zhilin Yang and Ernest Cyril de Run
Country Image and Brand Equity Effects of Chinese Firms and their Products on
Developed-Market Consumer Perceptions
1
Francis M. Ulgado, Na (Amy) Wen, and Moonkyu Lee
Standardization or Adaptation in International Advertising Strategies: The Roles
of Brand Personality and Country-Of-Origin Image
25
Xuehua Wang and Zhilin Yang
Impact of Quantity and Timeliness of E-WOM Information on Consumers Online
Purchase Intention Under C2c Environment
37
Zhang Bin, Fu Xiao-rong, Xie Qing-hong, Xiao Liu-li, and Che Yu
Determinants of Internet Buying Behavior in India 53
Ruchi Nayyar and S. L Gupta
Online Shopper Behavior: Infuences of Online Shopping Decision 66
Chayapa Katawetawaraks and Cheng Lu Wang
Assessing Customer Satisfaction with Non-Proft Organizations: Evidence from
Higher Education
75
Lily Huang, Zhilin Yang, and Gerald Hampton
AJBR
ISSN 1178-8933
Volume 1 Number 2 2011
Asian
Journal of Business Research
Copyright 2011 Asia Business Research Corporation Limited
All rights reserved. No part of this publication may be reproduced or transmitted in any form
or by any means, electronic or mechanical, including photocopy, recording or any information
storage and retrieval system, without permission in writing from the publisher.
The work published is the sole responsibility of the author/s.
Founding Editor
:
Professor Kim-Shyan Fam, Victoria University of Wellington,
New Zealand
Editor
:
Associate Professor Zhilin Yang, City University of Hong Kong,
Hong Kong
Managing Editor
:
Associate Professor Dr Ernest Cyril de Run, Universiti
Malaysia Sarawak, Malaysia
Published by Asia Business Research Corporation (ABRC) Limited
PO Box 5257, Lambton Quay, Wellington 6145, New Zealand
Volume 1 Number 2, 2011
ISSN 1178-8933
First published in 2011
Printed in Malaysia
Editorial Board
Founding Editor
Professor Kim-Shyan Fam
Victoria University of Wellington, New Zealand
Editor
Associate Professor Zhilin Yang
City University of Hong Kong, Hong Kong
Managing Editor
Associate Professor Ernest Cyril de Run
University Malaysia Sarawak, Malaysia
Editorial Advisory Board
Professor Russell Belk
York University, Canada
Professor Susan Hart
University of Strathclyde, UK
Professor John Dawson
University of Stirling, UK
Professor Leslie de Chernatony
University of Birmingham, UK
Professor Michael Hyman
New Mexico State University, USA
Professor Phil Harris
University of Chester, UK
Professor Lszl Jzsa
Szechenyi Istvan University, Hungary
Professor Zuohao Hu
Tsinghua University, China
Professor Jzsef Bercs
Corvinus University of Budapest, Hungary
Professor Kara Chan
Hong Kong Baptist University, Hong Kong
Professor Samsinar Md. Sidin
Universiti Putra Malaysia, Malaysia
Professor Datuk Md Zabid Abdul Rashid
Universiti Tun Abdul Razak, Malaysia
Editorial Review Board
Professor Ashish Sinha
University of New South Wales, Australia
Professor Michael Basil
University of Lethbridge, Canada
Assistant Professor Amy Na Wen
City University of Hong Kong, Hong Kong
Dr Mark Davies
Herriot-Watt University, Scotland
Dr David Waller
University of Technology Sydney, Australia
Associate Professor Fang Wan
University of Manitoba, Canada
Professor Nelson Ndubisi
Nottingham University Malaysia, Malaysia
Professor David Ackerman
California State University, Northbridge, USA
Dr Song Yang
University of South Australia, Australia
Professor Sanjay K. Jain
University of Delhi, India
Dr Fang Liu
University of Western Australia, Australia
Associate Professor Palanisamy Ganesan
VIT University, India
Professor Kenneth Alan Grossberg
Waseda University, Japan
Dr Shankar Lal Gupta
Birla Institute of Technology, India
Professor Yong Ki Lee
Sejong University, Korea
Professor Badar Iqbal
Aligarh Muslim University, India
Dr Pedro Brito
Universidade do Porto, Portugal
Associate Professor Ernest Cyril de Run
Universiti Malaysia Sarawak, Malaysia
Professor Jos Luis Vzquez-Burguete
Universidad de Len, Spain
Professor HS Cheema
CEO & Dean, IFEEL, India
Assistant Professor Andreas Petrou
Cyprus International Institute of
Management, Cyprus
Dr Anizah Hj Zainuddin
Universiti Teknologi MARA Malaysia,
Malaysia
Associate Professor Tho Nguyen
University of Economics, HCM City,
Vietnam
Dr Boo Ho Voon
Universiti Teknologi MARA Sarawak,
Malaysia
Professor Syed Anwar
Hamdan Bin Mohammed University, UAE
Associate Professor Margaret Craig-Lees
AUT University, New Zealand
Dr Paurav Shukla
University of Brighton, UK
Dr Henry Chung
Massey University, New Zealand
Assistant Professor Fiona Sussan
George Mason University, USA
Dr Mathew Parackal
University of Otago, New Zealand
Assistant Professor Kawpong Polyorat
Khonkaen University, Thailand
Associate Professor Michele Akoorie
University of Waikato, New Zealand
Professor Yang Xue
North China University of Water
Conservancy and Electric Power, China
Associate Professor Joanna Scott-Kennel
Waikato University, New Zealand
Professor Zoltan Veres
Budapest Business School, Hungary
Professor Wang Yangron
North China University of Water Conservancy
and Electric Power, China
i
Editorial
___________________________________________________________________________
Asias big two: China and India.
It is indeed an honor to be the latest Managing Editor of the Asian Journal of Business Research
and to see the progress of the journal. The journal is the concentrated effort of the Marketing in
Asia Group whose desire is to promote academic discussion in the context of business in Asia,
yet with a global perspective. The Marketing in Asia Group seeks to disseminate knowledge of
Asian business based on rigorous yet pragmatic research and this has seen the publications of
books as well as this journal and a conference specifc to the issue of business in Asia.
In the spirit of sharing knowledge of Asia, this edition has a mixture of authors from different
nations discussing about issues in China and India. Both nations are growing economies
with large populations. China is the worlds second largest economy. India is fast becoming
an economic powerhouse, with good economic growth and business friendly policies. The
capabilities and potential of both nations make them an intriguing and rich research area to be
looked into by researchers.
The frst paper discusses the impact of country image and brand equity of companies from
China but from the perspective of Americans. This is in line with the aspirations of the journal
and further articles that look at the various issues in Asia but from the viewpoint of other
nations or cultures is most welcomed. This will help in the development of an understanding of
business in Asia from a variety of perspectives. The second article looked at brand personality
and country of origin effect and again the study contrasted China versus United States but from
the perspective of Macau respondents. The study looked at two TV editions of four brands in
four product categories. From FMCG, the next article looks at e-commerce. Respondents were
University students in China who responded to issues on e-wom, trust and purchase intention.
From China we then traverse to India to look at an article that discusses the determinants of
buying behavior over the Internet. The article suggests that perceived ease of use and perceived
usefulness are antecedents of intention to purchase online in India. The following article
describes online shopping behavior and suggests a framework for online consumer decision.
The fnal article is on consumer satisfaction with non-proft organizations. This paper deals
with how Westerners (respondents from USA and The Netherlands) view such organizations.
This is of interest to the journal as we hope that such papers can be replicated in the Asian
context, perhaps with a different approach such as looking at the various Asian lifestyle and
philosophy towards philanthropy.
ii
We do hope that you will enjoy reading the journal and beneft from the knowledge shared.
Our gratitude and thanks to all our contributors and reviewers without whom this journal will
never be possible. The editorial team at the Asian Journal of Business Research encourages
academic and industry-based researchers to contribute research papers and case studies for its
peer-reviewed publication.

Kim-Shyan Fam
Zhilin Yang
Ernest Cyril de Run
1
Asian Journal of Business Research Volume 1 Number 2 2011
Country Image and Brand Equity Effects of Chinese Firms
and Their Products on Developed-Market Consumer
Perceptions
Francis M. Ulgado,
Georgia Institute of Technology
Na (Amy) Wen,
City University of Hong Kong
Moonkyu Lee,
Yonsei University
Abstract
As Chinas rapid economic growth continues to be a signifcant dimension of the world
economy and international business, more Chinese multinational frms have been emerging
with increasing efforts towards internationalization. While manufacturing, labor effciency and
costs have been a source of their competitive advantage, one area of relative weakness has been
their lack of corporate/product brand equity and recognition. Coupled with potential negative
country image effects, this defciency has hindered a more positive perception and acceptance
of brands and products from China, particularly in the more developed markets, such as the
United States (U.S.). This empirical study examines the nature of such a challenge faced by
Chinese frms and their need to develop an effective branding strategy for success in the U.S.
market.
Keywords: Country image, COO, country of origin effects, customer perceptions, brand
strategy, Chinese brands, emerging market brands, marketing to developed market customers
2
Introduction
The Country-of-Origin or COO effect refers to the picture, the reputation, the stereotype
that business people and consumers attach to products and services associated with a specifc
country (Lin and Kao, 2004; p.38). Such an image may emerge from representative products,
national characteristics, economic and political background, history and traditions (Nagashima,
1970). This paper furthers the notion that the nationality associated with consumer products
and services, or their COO, is continues to remain a signifcant factor in consumer perception
and purchasing behavior (Peterson and Jolibert, 1995; Al-Sulaiti and Baker, 1998; Verlegh and
Steenkamp, 1999; De Wet, Pothas and De Wet, 2001; Sharma 2010). COO studies have argued
that consumers have diverse perceptions about products or services made in or associated with
foreign countries, and that these perceptions affect their behavior based on stereotyped national
images of the country of association. Extensive empirical research has been completed in
this area throughout the past ffty years, concluding that COO effects do exist and they have
considerable impact on product quality evaluations and purchase intentions (e.g., Bilkey and
Nes, 1982; Cordell, 1992; Tse and Gorn, 1993; Papadopoulos and Heslop, 2002; Usunier
and Cestre 2008). In fact, the COO effect on consumers is one extrinsic cue that has grown
increasingly signifcant as the trend towards globalization of production and multinational
enterprise (MNE) strategy has intensifed, particularly for those from emerging markets such
as Taiwan, China and India.

While studies have concluded that under specifc conditions, consumers may exhibit a
preference for domestically made alternatives, or ethnocentrism (Han, 1988; Hong and
Wyer, 1989; Papadopoulos, Heslop and Beracs, 1990), or those from more developed countries
(Shimp and Sharma, 1987; Han, 1988; Granzin and Olsen, 1998; Douglas and Nijssen, 2004;
Josiassen and Harzing 2008). Other research has also revealed that the economic development
of associated countries indeed plays a role, as products made in less-developed countries were
not perceived as quality products (Reierson, 1966; Schooler, 1971; Gaedeke, 1973; Pappu,
Quester and Cooksey 2007).
It is based on this stream of research that we apply the concept of COO to the case of brands
and products associated with a major developing and emerging market, China. While Chinese
MNEs have traditionally focused on other emerging developing markets located in neighboring
Asian countries to export to and invest in, and have more recently established a dominant
product and investment presence in other emerging markets in Africa, the Middle East and
Latin America Gao, Woetzel and Wu, 2003; Wu, 2005), Chinese frms now compete in the
developed markets of Europe and North America (Gumbel and Jakes, 2005). Chinese brands
such as Lenovo (personal computers) and Haier (home appliances) have entered the U.S.
market with others, such as Geely and Chery automobiles planning to follow suit. As Chinese
frms expand into more developed economies, like the U.S., the literature has investigated
the various challenges and issues that they face when competing in such markets. A major
challenge for the internationalization of Chinese multinationals is the globalization of Chinese
brands. While China has become a dominant manufacturer to the world, it has been noted that
a single Chinese brand has yet to be signifcantly recognized globally (Fan, 2006). In addition,
Chinese frms have had uncertain success with Chinese brands in more competitive, complex
and sophisticated developed markets (Gao, Woetzel and Wu, 2003; Grosse, 2003 ).
Chinese branding diffculty has been attributed to various weaknesses, affecting Chinese brand
3
strategy success. For example, relative branding inexperience (Thomas Group, 2006), lack
of distribution capabilities, advertising/promotion savvy (Gao, Woetzel and Wu 2003) and a
negative COO effect (Brouthers, Story and Hadjimarcou 2005) have contributed to weak brand
awareness and perceptions in developed markets. As a result, studies have indicated that less
than positive general perceptions and attitudes exist towards products from China from among
developed market consumers, such as the U.S. buyer. For instance, in a 2002 study, only 17
percent of U.S. residents surveyed expressed a high degree of interest in purchasing products
imported from China (The Futurist, 2006). In the same survey, the major reason for the lack
of interest is the inferior quality associated with Chinese brands. Meanwhile, another survey
found that a Made in China label hurt Chinese brands (Interbrand, 2005).
While the increased globalization of frms from emerging markets have motivated recent
studies to focus on COO effects involving emerging markets as both producing countries and
consuming countries (Demirbag Sahadev and Mellahi, 2010; Sharma, 2010), few studies have
started to examine the COO phenomenon specifc to China. Brouthers, Story and Hadjimarcou
(2008) used signaling theory in their study of low value products associated with China (wallet,
wine glass, and umbrella). They suggest that multiple COO labeling and the use of secondary
country associations, as well as the use of familiar brands, or a combination of both, as ways
to overcome any negative COO effects. Fetscherin and Toncar (2009) focused the country of
origin effects on the brand personality perception of US consumers by focusing on a comparison
of American, Indian and Chinese automobiles. Their fndings indicate that the country of
manufacture has a signifcant impact on perceived brand personality.
Therefore, given the paucity of extant studies on the topic, t he purpose of this paper is to further
examine the nature of negative COO effects in developed markets for products associated with
China as an emerging market, and the signifcance of other extrinsic cues as moderating factors.
Specifcally, the paper seeks to: 1) further confrm that although U.S. consumers are exposed to
numerous products manufactured in China, they maintain a low awareness and understanding
of Chinese brands in general, and that brands and products, an association with China exerts
a negative infuence on the perceptions and attitudes of the U.S. consumer; 2) to broaden the
work of Brouthers,Story and Hadjimarcou (2008) by investigating more high-value products
(white goods, laptops and autos) and related brands given the actual U.S. market experience
of Chinese brands Haier and Lenovo, and the potential experience of Geely; 3) to consider
the option of developed-country manufacturing as an alternative to multiple COO labeling
(Brouthers,Story and Hadjimarcou 2008); 4) to explore the option of developing Chinese
brands as an alternative to utilizing established developed country brands ; 5) to explore the
moderating effects of other extrinsic cues such as country-of-brand, country-of-manufacture,
product category, and brand familiarity considerations, and their impact on overall COO on
product quality perceptions and willingness to buy.
In pursuit of this direction, the paper continues with a conceptual development and framework
based on existing research. From this section and additional studies, hypotheses are next derived.
Through a survey approach, these hypotheses are then tested and the results discussed. Overall
fndings indicate that while the moderating variables vary in their impact, brand strength and
the country of brand dominate other considerations, contrary to fndings of previous research.
In the remaining sections, managerial implications are offered while limitations and future
research opportunities are identifed.
4
Conceptual Development and Framework
Components of the Country-of-Origin Effect
In the early stages of COO as a research feld, country of origin effects were considered a
single cue made-in concept in which products were typically headquartered, branded
and manufactured in the same country (Dichter, 1962). However, this approach eventually
became a cited limitation as the need to further decompose COO was realized (Johansson,
Douglas and Nonaka., 1985; Ozsomer and Cavusgil, 1991; Ettenson, 1993). With the growth
of international value chains and multi-country production locations, the notion of COO has
evolved into a more complex multi-component construct. Given the increased occurrence
of bi-national products carrying a brand associated with one country, but manufactured in
another country, the overall COO effect has been more commonly characterized as consisting
of two sub-types of country association: Country-of-Brand (COB), the country that the brand
is originally from and usually where the headquarters is located, and Country-of-Manufacture
(COM), the country where the product is primarily produced and assembled (Ulgado and Lee,
1993; Lim and OCass, 2001; Fetscherin and Toncar 2010). Moreover, the COM effect has
been further dissected into Country-of-Parts (COP), Country-of-Design (COD), and Country-
of-Assembly (COA) (Chao, 1993; Insch and McBride, 1998). This prevalence of bi-national
and multi-national products may result in potential dissonance for consumers as they try to
reconcile conficting perceptions about the country association of different components of the
product (Phau and Prendergast, 2000).
Research has shown that manufacturing location and the perceived country of manufacture can
affect consumer perceptions of product quality (Lee and Schaniger 1996). When an MNE elects
to change the manufacturing location of a particular product from a country with a favorable
consumer association to one with less favorable perceptions, the overall COO effect could be
affected despite maintaining a positive COB infuence. Han and Terpstra (1988) for example
found that Japanese autos experienced brand deterioration when production was located in
developing countries. In other instances, the impact of the COB affected consumer product
quality perceptions greater than the COM effect. Ulgado and Lee (1993) discovered that a
strong well-developed brand can overcome any negative COM infuence, as consumers are
convinced that the same level of quality is maintained in all its manufacturing operations. The
decomposition of the overall COO effect into its COB and COM components can be potentially
signifcant to international operations and marketing managers and their international brand
and manufacturing location strategies.
Cognitive and Affective COO Effects
Prior research on COO effects has essentially used either a cognitive or affective theoretical
perspective. Under the cognitive approach, consumer information processing research argues
that in addition to a products intrinsic physical attributes (such as performance, design, taste)
, consumers also rely on extrinsic product-related features (such as brand, price, COO) in their
product evaluation (Schellinck, 1983; Peter and Olson, 1987). Research in marketing has
provided evidence that consumers often use extrinsic cues as the basis for their evaluation
of product quality (Rao and Monroe, 1989; Dodds Monroe and Grewal, 1991 for price and
brand effects). Specifcally, a substantial amount of research has supported the signifcance of
COO as an extrinsic cue affecting consumer product evaluations (see Bilkey and Ness, 1982;
Johansson, Douglas, and Nonaka 1985; and Ozsomer and Cavusgil, 1991 for a more detailed
review).
5
In this regard, studies have suggested that consumers prefer products from some countries over
others (Tongberg 1972; Yaprak, 1978). Such preference bias for products generally exists across
levels of economic development of countries, indicating their hierarchical nature (Schooler,
1971; Wang and Lamb, 1983). In particular, research has indicated that country identifcation
generally has a positive effect on product evaluations for some, relatively more developed
countries (Han and Terpstra, 1988; Papadopoulos, Heslop and Beracs, 1990), while it has a
negative impact for other, less developed countries (Krishnakumar, 1974; Khanna, 1986). As
a result, COO effects can act as a cognitive cue from which consumers can infer beliefs about a
specifc product based on their perceptions about the country from which the product originates
(Verlegh and Steenkamp, 1999), indicating that consumers product perceptions can be derived
from stereotypical beliefs about the originating country (Erickson et al., 1984) Overall product
evaluation is infuenced by country stereotyping impacting consumer evaluation of products
from that country (Bilkey and Nes, 1982; Maheswaran, 1994). For example, certain countries
are regarded as offering superior performance for certain categories of goods - French wines,
German engineering, Swiss watches. Conversely, negative associations may exist for some
countries, e.g. high technology products like cars produced in less developed countries such as
China or India.
In addition to the cognitive aspects of COO, other studies have focused on the affective effects
of COO on consumer perception, examining its emotional or symbolic impact on product
evaluation (Hong and Wyer, 1989, 1990). For example, COO may associate a product with
patriotism, national identity, pride, status, authenticity, exoticness, or other attributes of self-
expression or image (Botschen and Hemettsberger, 1998; Verlegh and Steenkamp, 1999).
Consumer perceptions of a brand from a particular country can create intangible assets or
liabilities in the minds of the consumers that do not necessarily have a direct link to product
performance (Kim and Chung 1997). Other affective associations can also be related to
consumer attitudes towards the policies, practices or actions of a particular country (Leonidou,
Palihawadana and Talias, 2007). As a result consumers penalize some countries by boycotting
their products, and support others by buying their products (Smith, 1993). Other types of non-
cognitive biases based on subjective judgments or normative criteria have additionally been
identifed as COO-related factors, such as consumer racism (Ouellet, 2007) and home-country
bias stemming from consumer nationalism or ethnocentrism (Shimp and Sharma, 1987; Klein,
Ettenson and Krishnan, 2006; Verlegh, 2007).
Moderating Factors Affecting COO
Since other cues, in addition to country information, are available to consumers in reality,
the research paradigm should be extended to investigate potential interactions between the
country label and these cues, as a number of studies have indeed found variables that moderate
the COO effect. Therefore it is important to specify conditions under which consumers show
different COO effects rather than documenting the general effect.
Such variables can be macro or micro-related factors, external to the consumer. For example,
studies have found the COO effect to be consuming country-specifc (Nagashima, 1970;
Cattin, Jolibert and Lohnes, 1982; Wong, Polonsky and Garma, 2008; Sharma, 2010), product/
product-category specifc (Bannister and Saunders 1978; Lumpkin, Crawford and Kim, 1985;
Roth and Romeo, 1992; Hamin, 2006). Pappu et al (2007) further showed that consumers
hold different sets of beliefs across product categories and that their perceptions of products
6
from a specifc country vary by product category. While a number of studies have involved
the automobile product-category, most of them have looked at the comparison across product
categories. Comparisons have been between autos, appliances, clothing, perfume, and toiletries
(Darling and Kraft, 1977); cameras and calculators (Yaprak, 1978); pharmaceutical products
(Mffenegger et al. 1980), fresh fruit and vegetables (Hooley et al. 1988); beer, shoes, crystal,
bicycles, and watches (Roth and Romeo, 1992), and athletic shoes and television sets (Ulgado
and Lee, 1993). Moreover, these effects are generally less signifcant for low-value products
with simple manufacturing processes (such as shoes, clothing) than for high-value products
with complex manufacturing (such as computers, automobiles) (Ahmed et al., 2002).
Other moderating variables are more internal to the consumer and deal with demographic
and psychographic consumer-specifc variables (Anderson and Cunningham, 1972; Eroglu
and Machleit 1988; Wall, Heslop and Hofstra 1988). More recent studies have investigated
the moderating effects of consumer materialism (Demirbag, Sahadev and Mellahi, 2010;
Sharma 2010) and value consciousness (Kinra, 2006; Sharma, 2010). For example, Demirbag,
Sahadev and Mellahi (2010) found that the moderating role of materialism depends on the type
of product. Namely, materialism is a signifcant negative moderator for high value products
from emerging countries, and is less signifcant for low value products from emerging markets.
Meanwhile, Sharma (2010) showed signifcant differences in the moderating infuences of
consumer ethnocentrism, materialism and value consciousness on COO effects across four
different developed and emerging markets.
HYPOTHESES
We start with the fndings of earlier studies which have shown that while more developed
countries generally exhibit a positive COO effect on product evaluations and consumer
perceptions of product quality (e.g. Gaedeke, 1973; Wall and Heslop, 1986; Papadopoulos,
Heslop and Beracs, 1990), it has a negative impact for less developed countries (Krishnakumar,
1974; Khanna, 1986; Pappu, Quester and Cooksey 2007). More recent research has found
this to be true in the case of U.S. consumers and their attitudes towards Chinese products and
brands in general (The Futurist, 2006; Interbrand, 2005):
H1a: U.S. consumers have a generally low quality perception of Chinese products.
H1b: U.S. consumers have a generally unfavorable perception of Chinese brands.
Specifc to brand, we also propose that Chinese brands have very weak brand equity in the U.S.
market, indicated by low recognition and awareness of brands from China (Fan, 2006; Gao,
Woetzel and Yu, 2003). Therefore:
H2: U.S. consumers have a generally low level of awareness of Chinese brands.
If hypotheses 1 and 2 hold, then previous cited fndings can be confrmed and it can be
established that, in general, a negative COO effect infuences the perception of U.S. consumers
when it comes to products and brands associated with China. The level of a countrys economic
development can be seen as representative of a countrys overall ability to manufacture
7
products that require a particular level of skill and technology (Verlegh and Steenkamp, 1999).
Therefore, a countrys ability to produce globally competitive products or services, embodied
in its economic capacity, is an information cue that infuences customers perceptions and
images of COO (Lin and Sternquist, 1994). Similarly, Wall, Leifeld and Heslop (1991) found
that unknown brands are only favored when they are made in more developed, high reputation
countries. In the case of Chinese brands, we introduce the notion that consumer perception
and evaluation of a product with a brand associated with China can be signifcantly affected by
the level of economic development of the country-of-manufacture (COM), other than China.
Specifcally, the overall Chinese COO effect can be moderated by a developed country COM.
Therefore, we propose:
H3: For Chinese brands, the overall COO effect on the perception of U.S. consumers is
signifcantly positively infuenced by the COM (country-of-manufacture) associated with a
favorable image.
In addition to COO, research has considered other extrinsic cues in a multi-cue approach to
determining their effects on consumer perception (e.g., Srinivasan, Jain and Sikand, 2003;
Miyazaki, Grewal and Goodstein, 2005). Studies have found that when additional cues are
present, the relative importance of COO on product evaluation decreases (Johansson, Douglas
and Nonaka, 1985; Johansson and Nebenzhal, 1986; Hastak and Hong, 1991). One extrinsic
cue that has received attention is brand and related COB effects. The rationale is that customers
who lack information about the product may rely on the brand name to infer its quality (Sybillo
and Jacoby, 1974). In todays global environment, it is common to fnd products manufactured
in one country and branded in another. Studies have shown that a strong brand and/or COB
effect can outweigh negative COM effects (Cordell, 1993; Tse and Gorn, 1993; Ulgado and
Lee, 1993; Jo, Nakamoto and Nelson, 2003; Ahmed et al., 2004, Chao, Wuhrer and Werani,
2005). In the case of Chinese products, the strength of a non-Chinese brand (NCB) may have
a moderating infuence on possible negative COM effects associated with products made in
China. Hence, we propose:
H4a: For products manufactured in China, the overall COO effect on the perception of U.S.
consumers is signifcantly positively infuenced by the association with a non-Chinese brand
with strong brand equity.
H4b: For products associated with China, the COB (country-of-brand) effects are stronger than
COM (country-of-manufacture) effects on the perception of U.S. consumers.
While it has been proposed that Chinese brands have a low level of awareness and recognition
and, therefore, brand strength in the U.S. market, it is argued that some Chinese brands are
more developed than others. Brands like Lenovo and Haier have already been introduced to
the U.S. market, while others such as Geely and Chery have not. Therefore, it is proposed
that the U.S. consumer is more familiar with the introduced brands and their products. In this
regard, Schaefer (1997) concluded that brand familiarity and objective product knowledge has
a signifcant impact on COO effects in product evaluations. Lee and Ganesh (1999) found that
with product and brand familiarity, moderate familiarity consumers are less infuenced by COO
than low or high familiarity consumers. Therefore:
H5: The more developed (in terms of consumer familiarity) the Chinese brand in the U.S.
8
market, the more positive the COO effect on the perception of U.S. consumers.
There are indications that COO effects vary across product or service categories (Kaynak and
Cavusgil, 1983; Ulgado and Lee, 1993; Jaffe and Nebenzhal, 2001; Javalgi, Cutler and Winans,
2001). Most studies of COO effects have focused on high-value products, such as automobiles
and electronics (e.g., Han and Terpstra, 1988; Chao, 1989, 1993; Han, 1988; Tse and Lee,
1993; Maheswaran, 1994). Others have looked at the impact of customers COO perceptions
on low-value products such as clothing or coffee (Wall, Leifeld and Heslop, 1991; Ulgado and
Lee, 1993; Ahmed et al., 2004). Li and Wyer (1994) concluded that COO effects on product
evaluation are more signifcant in the purchase for high value products, such as automobiles,
electronics and white goods. Conversely, for low-value basic products such as food and apparel,
the purchase decision is less signifcant. Thus, the infuence of COO in product evaluation is
expected to be weak, partly due to the products lower monetary risk (Ahmed et al., 2004).
Similarly, for low-value products where the value for money matters more than image and
quality, price can be seen as more infuential than COO effects in customers purchase decisions
(Wall, Leifeld and Heslop, 1991). Hence:
H6a: For products associated with China, the overall COO effect on the perception of U.S.
consumers is signifcantly higher for high value products.
H6b: For products associated with China, the overall COO effect on the perception of U.S.
consumers is signifcantly lower for low value products.
METHODOLOGY
Pilot Study
A paper and pencil pilot study was conducted with eighty-six adult respondents in a major
metropolitan area in southeastern United States to determine their perceptions of different
product categories and their value levels, related varying conditions regarding corresponding
brands associated with developed countries such as the U.S. and Japan, and a less-developed
country such as China. The respondents were also asked about their familiarity with specifc
Chinese brands in selected product categories. The study results indicated that product
categories such as apparel (clothing and shoes), toys, kitchenware and cosmetics are considered
low-value, while electronic products such as kitchen small appliances (toaster ovens and
compact refrigerators), stereo equipment, television sets and laptop computers, as well as other
powered equipment (automobiles, powerboats, and motorcycles) are considered high-value.
Among the high-value products, their respective values compact refrigerators (low), laptop
computers (middle), and autos (high) were further identifed accordingly.
With regard to specifc brands in each product category, the respondents considered Ford
Focus, Toyota Corolla, Honda Civic Ford Fiesta, and Honda Accord as the top fve compact
car brands (Dell, Toshiba, HP, Apple and Sony for laptops; GE, Sanyo, Kenmore, Frigidaire
and Hitachi for compact refrigerators) associated with the U.S. and Japan, in terms of overall
quality and willingness to purchase. When asked about specifc Chinese auto brands, the two
respondents that were able to respond correctly, mentioned Geely with no respondent able to
9
identify a specifc model (Lenovo and Haier were the only Chinese brands mentioned for laptop
computers and compact refrigerators respectively), which they rated lower than the American
and Japanese counterparts. When asked about specifc Chinese brands, the respondents were
most familiar with Lenovo, followed by Haier, and least familiar with Geely.
Main Study
To empirically test the hypotheses, a paper and pencil survey approach was used. We
incorporated exploratory questions in the frst two part of the questionnaire. In this section the
respondents were asked about their awareness of Chinese brands by listing as many Chinese
brands they are aware of (unaided recall), their reasons behind their willingness-to-purchase
(or not to buy) a product Made in China (open-ended; list top three reasons), and their general
feelings about Chinese products and brands by rating (7-point Likert scale) their overall level
of quality and level of favorability. The second section of the survey asked respondents to rate
both their quality perceptions and their willingness-to-purchase products Made in China for
seven product categories ranging in product value.
In the following main section, respondents were asked to provide ratings on a 7-point scale
for fve quality measures (design/style, reliability, durability, service support, and performance
satisfaction) that made up the overall Quality dependent variable. Reliability of the fve
dimensions was deemed acceptable with a Cronbachs Alpha of 0.91 bivariate correlations
across the fve measures ranged from 0.72 to 0.87. A single factor was derived, accounting for 76
percent of the variance. As a result, the fve dimensions were averaged and regarded as a single
main dependent variable. To further support respondent quality perceptions, respondents were
asked to rate a second variable Willingness to buy. Consequently, respondents evaluated
12 specifc product scenarios for both quality and willingness-to-purchase. The information
for each product option included the brand and product category, an intrinsic product attribute,
the country-of-manufacture/assembly, retailer where available, and the price. Products were
selected from previously identifed product categories (automobile, laptop computer, and
compact refrigerator), and brands were selected for each category (Toyota Corolla, Geely
Haoqing, Dell, Lenovo, G.E., and Haier) with different associations of county-of-manufacture/
assembly (U.S., Canada, and China).
The fnal section of the survey included questions asking the respondents to identify Chinese
brands from a list of 16 brand names (aided recall). The rest of this section asked for
classifcation information about the respondent. Responses from a convenience sample of 247
adult consumers in a Southeastern U.S. metropolitan area were used for this study.
RESULTS
Sample Characteristics
The survey responses of 247 adults were used for the study, of whom, 50.4 percent were female
while 49.6 percent were male. The age range varied from 18-24 year-olds (22.7 percent),
25-29 (15.3 percent), 30-39 (16.5 percent), 40-49 (21.9 percent), 50-59 (17.8 percent) 60-
69 (4.1 percent) and 70+ (1.7 percent). The signifcant majority of respondents were well-
educated (78.2 percent), having attended a 4-year college (55.1 percent) or graduate school
(23.1 percent). The number of individuals (adults and children) living in the respondents
10
household ranged as follows: 1-2 (41.9 percent), 3-4 (47.3 percent), and 5 or more (11 percent).
Household income was somewhat skewed towards the upper income levels (11.7 percent in the
below $40K bracket, 29.6 percent in the $40-79K range, 16.4 percent in the $80-99K level, and
42.6 percent in the $100K+ segment).
Test of Hypotheses
Hypothesis 1a posits that U.S. consumers generally have a low quality perception of Chinese
products, while Hypothesis 1b argued that U.S. consumers generally had an unfavorable
perception when it comes to Chinese brands. Respondents were asked how they felt about
Chinese products in general. They were also asked how they felt about Chinese brands. Table
I exhibits the means and standard deviations of the ratings.
Table I: Hypothesis 1a AND 1b- Perceptions of Chinese Products and Brands
Mean
Std.
Deviation
Chinese
Products*
3.7796 1.21145
Chinese
Brands**
3.8481 1.05069
*1=Low Quality, 7=High Quality
**1=Very Unfavorable, 7=Very Favorable
As shown in the table, the respondents considered Chinese products as low in quality (M=3.78)
and have an unfavorable attitude towards Chinese brands (M=3.85). Thus, Hypotheses 1a and
1b are supported and the previous surveys are validated. In general, it is further confrmed that
U.S. consumers surveyed do not have a positive view of Chinese products and brands.
Hypothesis 2 stated that U.S. consumers generally had low brand awareness for Chinese brands.
Respondents were asked to list as many Chinese brands as they were aware of (unaided recall).
The results revealed that 84.2 percent of the respondents could not think of any, while only 11.3
percent could correctly recall only one Chinese brand. Only 4.4 percent could correctly recall
2 or more Chinese brands. Therefore Hypothesis 1 and the fndings of previous research are
supported in the notion that U.S. consumers have a very low, if not non-existent, awareness of
Chinese brands.
Hypothesis 3 claims that the overall COO effect on the perception of U.S. consumers was
signifcantly positively infuenced by the COM associated with a favorable image. In
particular, for the same brands, the more positive the COM effect, the more positive the overall
COO. The respondents were asked to rate (in terms of quality and willingness-to-purchase)
three products (automobiles, computers, and refrigerators) with Chinese brands, namely, Geely
Haoqing, Lenovo and Haier, all made in China. They were also asked to rate three other
products (automobiles, computers, and refrigerators) with the same three Chinese brands, only
11
this time made in the U.S. or Canada. One-way MANOVA and GLM multivariate analysis was
used, producing an overall signifcant result (p<.05) with the contrast result signifcant between
Made in China and Made in U.S. or Canada. This is shown in Table II.
Table II: Hypothesis 3- Country-Of-Manufacture (COM) Effects
Multivariate Tests
Effect F Hypothesis df Error df Sig.
Intercept 3887.823 2.000 1357.000 .000
COM 3.173 2.000 1357.000 .042
Pairwise Comparisons
Dependent
Variable
(I)
COM
(J)
COM
(I)
Mean
(J)
Mean
Mean
Difference
(I-J)
Std.
Error Sig.
Quality China
Made
Non-
China
Made
3.682 3.880
-.198(*) .086 .022
Willingness to
buy
China
Made
Non-
China
Made
3.147 3.380
-.233(*) .096 .016
Based on estimated marginal means
* The mean difference is signifcant at the .05 level.
Therefore, these results support Hypothesis 3. U.S. customers have a more positive quality
perception and greater willingness-to-purchase Chinese brands if they are made in a more
developed and more reputable country, such as the U.S. or Canada, than if they were made in
China.
While the preceding hypothesis involves the COM effect, Hypotheses 4a and 4b considers the
COB effect. While the results have shown that a Made in China COM does adversely affect
consumer perception and willingness-to-purchase, Hypothesis 4a posits that this negative effect
can be infuenced by a positive COB effect, resulting in a more positive overall COO effect
and consumer reaction. The respondents were asked to rate (along quality and willingness-
to-purchase) three products made in China with Chinese brands (Geely Haoqing, Lenovo and
Haier). They were then asked to rate three more products; Toyota Corolla, Dell and G.E., made
in China, with non-Chinese brands with relatively greater brand strength and recognition. A
one-way MANOVA and GLM multivariate analysis was used, producing an overall signifcant
result (p<.05) with the contrast result signifcant between the weaker Chinese brands and the
stronger non-Chinese brands. This is indicated in Table III.
12
Table III: Hypothesis 4a- Country-of-Brand (COB) Effects

Effect F Hypothesis df Error df Sig.
Intercept 5764.796 2.000 1393.000 .000
COB 149.327 2.000 1393.000 .000
Pairwise Comparisons
Dependent
Variable
(I)
COB (J) COB
(I)
Mean
(J)
Mean
Mean
Difference (I-J)
Std.
Error Sig.
Quality Weak
Brand
Strong
Brand
3.730 5.121
-1.391(*) .082 .000
Willingness to
buy
Weak
Brand
Strong
Brand
3.170 4.517
-1.347(*) .095 .000
Based on estimated marginal means
* The mean difference is signifcant at the .05 level.
Therefore, the results support Hypothesis 4a. U.S. customers have a more positive quality
perception and greater willingness-to-purchase Chinese-made products if they are branded
with stronger, more recognizable brands with superior brand equity. Since the results show
support for both Hypothesis 3 (COM effects) and Hypothesis 4a (COB effects), the question
as to which effect was stronger emerges. Hypothesis 4b seeks to provide the answer. To this
effect, the respondents were asked to rate three products made in China, but with non-Chinese
brand names (Toyota Corolla, Dell and G.E.), respectively. In addition, they were asked to
rate three products that were made in the U.S. or Canada, however, with Chinese brand names
(Geely Haoqing, Lenovo and Haier). One-way MANOVA and GLM multivariate analysis was
used, producing an overall signifcant result (p<.05) with the contrast result signifcant between
Chinese brands made outside of China, and non-Chinese brands made in China. See Table IV
below.
Table IV: Hypothesis 4b- COB Versus COM Effects
Multivariate Tests
Effect F Hypothesis df Error df Sig.
Intercept 6358.730(a) 2.000 1395.000 .000
COB vs. COM 112.871(a) 2.000 1395.000 .000
13
Pairwise Comparisons
Dependent
Variable
(I) COB vs.
COM
(J) COB
vs. COM
(I)
Mean
(J)
Mean
Mean
Difference
(I-J)
Std.
Error Sig.(a)
Quality Chinese
brand made
in outside of
China
Non-
China-
brand
made in
China
3.891 5.085
-1.194(*) .080 .000
Willingness
to buy
Chinese
brand made
in outside of
China
Non-
China-
brand
made in
China
3.389 4.503
-1.114(*) .096 .000
Based on estimated marginal means
* The mean difference is signifcant at the .05 level.
Support for Hypothesis 4b was also given by the results. For the U.S. consumers surveyed,
the COB effect was stronger than the COM effect on their quality perception and willingness-
to-purchase. While COB seems to be the more dominant component of the overall COO effect
on the U.S. consumer, and a stronger COB effect implies a more positive consumer response,
a more detailed examination of the characteristics of Chinese brands with regard to their COB
infuence on the respondents is required. Hypothesis 5 suggests that while Chinese brands
are relatively weak in general, some Chinese brands are comparatively stronger and more
developed than others from the perspective of the U.S. market.
Since Geely Haoqing has not yet been introduced in the U.S., it is expected to be the least
developed and the weakest brand. Meanwhile, Lenovo would be the most developed with
the strongest equity (e.g. the widely publicized connection with IBM), while Haier would
be somewhere in the middle. The quality and willingness-to-purchase ratings given in the
survey, specifc to the three Chinese brands (Geely Haoqing, Lenovo and Haier), were analyzed
using one-way MANOVA and GLM multivariate analysis. The overall result was signifcant
(p<0.5). However, while the contrast result was signifcant between the least developed brand
and the middle and high counterparts, the result was insignifcant between the middle and
highly developed brands (Table V).
Table V: Hypothesis 5- Brand Development
Multivariate Tests
Effect F Hypothesis df Error df Sig.
Intercept 3981.110(a) 2.000 1356.000 .000
Brand Development 26.572 4.000 2714.000 .000
14
Pairwise Comparisons
Dependent
Variable
(I) Brand
Development
(J) Brand
Development
(K) Brand
Development
(I)
Mean
(J)
Mean
(K)
Mean
Mean
Difference
(I-J);
(I-K);
(J-K)
Std.
Error Sig.
Quality Low
Developed
Middle
Developed
High
Developed
3.420 3.864 4.048
-.444(*) .104 .000

-.628(*) .104 .000

-.184 .104 .077
Willingness
to buy
Low
Developed
Middle
Developed
High
Developed
2.589 3.502 3.670
-.913(*) .114 .000

-1.081(*) .115 .000

-.168 .114 .139
Based on estimated marginal means
* The mean difference is signifcant at the .05 level
In general, the results support Hypothesis 5, specifcally between the brand not yet available
in the U.S. market and its already introduced counterparts. In this sense, Lenovo and Haier
are stronger, more developed brands in the U.S. than Geely Haoqing. And therefore, have a
relatively more positive COO effect.
Lastly, Hypotheses 6a and 6b proposed that for high value products, the COO effects are greater
than for products with lower value. Specifcally, the COO effects are more signifcant when it
comes to automobiles, than when a laptop computer is involved, and even lower for a compact
refrigerator. In the study, the respondents were asked to rate three product types (automobiles,
computers, and refrigerators) made in China (with the Chinese brands: Geely Haoqing, Lenovo
and Haier), in terms of product quality and willingness-to-purchase. The data was analyzed
(one-way MANOVA and GLM multivariate analysis) and the overall result was signifcant
(p<0.5). The contrast result was also signifcant between the high value product (automobile)
and its low and medium value counterparts. However, the comparison between the low value
(compact refrigerator) and medium value (laptop computer) products was (p=.098). This was
evident in the following Table VI.
Table VI: Hypothesis 6a and 6b: Product Value
Multivariate Tests
Effect F Hypothesis df Error df Sig.
Intercept 6936.674(a) 2.000 2073.000 .000
Value 32.702 4.000 4148.000 .000
15
Pairwise Comparisons
Dependent
Variable
(I)
Value
(J)
Value
(K) Brand
Development
(I)
Mean
(J)
Mean
(K)
Mean
Mean
Difference
(I-J); (I-
K); (J-K) Sig.
Quality Low
Value
Middle
Value
High Value 4.301 4.480 3.932 -.179
.098
.369(*) .000
.548(*) .000
Willingness
to buy
Low
Value
Middle
Value
High Value 3.962 4.063 3.080 -.101
.212
.882(*) .000
.983(*) .000
Based on estimated marginal means
* The mean difference is signifcant at the .05 level.
The results partially support Hypotheses 6a and 6b in the sense that the high value product
exhibited the relatively greatest COO effect for Chinese products. When it comes to Geely
Haoqing automobiles, a more negative COO effect resulted in a lower quality perception and
willingness-to-purchase for U.S. consumers relative to the other products with lower value.
In contrast, the lower value Haier compact refrigerator was regarded more positively. What
was interesting and unexpected was that the product with a level of value in-between (Lenovo
laptop computers) the other two received the most positive customer reception. It was possible
that the relatively stronger brand equity outweighed the product value effect on COO.
MANAGERIAL IMPLICATIONS AND CONCLUSIONS
The results of the study do confrm that for brands and products associated with China, COO
effects do adversely infuence the U.S. consumer and their quality perceptions and willingness-
to-purchase. Our fndings support the notion that in a more developed environment, such as
the U.S., the market generally tends to have a low quality perception of brands and products
from a less developed source such as China. Moreover, there is signifcantly little to no brand
awareness for Chinese brands among U.S. consumers. Therefore, as Chinese frms globalize
and expand into more developed markets, dealing with the COO effect and building brand
strength are critical to their strategic success.
The negative COM effect that a made in China association has on developed-market
consumers needs to be ideally reversed into a positive effect, or in the least, neutralized. Under
similar situations, such has been achieved through substantial communication with country-
image marketing through advertising and promotion. Taiwan, for example, has invested in a
very well made in Taiwan marketing campaign and even developed the innovalue tag line
to capture the innovation and value that Taiwan-made products can offer. In another example,
Colombian coffee growers de-commoditized the status of their coffee and created a positive
COO effect in a specifc product category. In addition, they built a personality around the
product personifed in the brand character, Juan Valdez. Other developing countries, such
16
as South Korea, Indonesia, and Chile have utilized marketing and advertising to developed
markets like the U.S. to deal with COO issues and create brand/product awareness and a positive
COM effect. Another option would be to change the COM by establishing operations in more
developed and reputable environments, such as the developed market itself. This can be done
through either greenfeld or merger/acquisition activity. In fact, we have seen a number of
frms from less developed countries initiating overseas manufacturing in this manner.
These implications support the classic precept that international marketing managers, armed
with market knowledge should frst develop a quality product with effective and strong
attributes to successfully meet customer needs. The next task would be to then build, establish
and maintain strong brand equity to complement the product. The competitive edge derived
from product characteristics and brand should be introduced and reinforced through suffcient
and appropriate marketing communication. This marketing emphasis on brand and product
attributes can effectively outweigh any negative COM effects. Previous studies (Chao, 1989:
Tse and Gorn, 1993) have suggested ways that frms with traditionally unfavorable COO effects
(e.g. those from less developed or emerging markets) can become more competitive. They
could shift from exporting domestically manufactured products to foreign manufacturing in a
favorable country image location such as a more developed economy like the United States.
The underlying assumption is that foreign direct investment (FDI) in manufacturing would
realize a positive effect of COM. For example, by assembling its autos in the U.S., Geely
could overcome any negative association with a made-in-China label. This follows the FDI
strategy of Korean auto manufacturers Kia and Hyundai who have indeed located assembly
plants in the southeastern United States.
The fndings of the study further suggest that a weak brand, or negative COB effect, also needs
to be addressed. In fact, the results indicate that it may even be more important to focus on
COB, rather than COM. As past research has shown, a strong brand can dominate over negative
COM effects (Ulgado & Lee, 1993). The fndings are encouraging for international frms from
less developed or emerging economies which seek to enter more developed markets as part of
their globalization strategy. The results imply that the marketing emphasis of these companies
should be frst on creating a known and favorable brand image, which is expected to reduce a
negative COM effect. For instance, Korean frms Daewoo (Daewoo, Thats Who campaign)
and LG, as well as Taiwanese companies Acer and HTC have placed their advertising emphasis
on company brand awareness and image building. Nevertheless, it should be maintained that a
brand name will never by established without actual and signifcant intrinsic product attribute
strength, and a marketing focus on them. Korean automaker Hyundai appears to put this idea
into practice as its advertising emphasizes product features, price and performance.
Rather than FDI alternatives, Geely and other similar unknown or weaker Chinese brands could
be better off by frst developing a recognized brand image and building strong brand equity.
Instead of overseas transplant manufacturing to achieve positive COM effects, maintained
domestic manufacturing with exporting, licensing, and private labeling through established
retail distributors (such as Samsung did when it frst entered the U.S.), could provide more
proftable advantages in the long run. Another alternative would be the acquisition of a company
with established brands, or a merger, joint venture, or strategic alliance with such a frm. This
would not offer not only known-brand advantages but marketing, distribution and servicing
experience and resources. Once product performance and other intrinsic attribute reputation
17
is established, along with a build-up of brand recognition, any negative COM effect would
diminish as the brand name effect would dominate. The now-prestigious Japanese brands
such as Nikon, Sony, and Honda (which once had a negative COM effect), and the more recent
Korean brands like Hyundai, LG and Samsung have relied on exporting and building brand
equity through intrinsic product attribute quality and other positive extrinsic features such as
warranties, servicing, retailer reputation and price.
The fndings of the current study also imply that for strong and favorable brands, country sourcing
considerations become less signifcant as global brand strength and reputation overshadow
COM effects. In the long run, a more global environment, with increased multi-country sourcing
and/or assembly, and the proliferation of quality global brands, would eventually diminish the
signifcance of COM relative to brand name and intrinsic product attributes. While the made-
in concept and COM could eventually mean several different countries, the brand and the
country associated with it, COB, would remain consistent. Therefore, the implications suggest
that COM considerations should not dominate manufacturing and sourcing strategies. Adequate
research should be performed to confrm the existence and signifcance of any benefcial COM
effects on consumer perception. The potential benefts from expected positive COM infuence
to be gained by FDI should be carefully weighed against the resulting costs. Other alternatives
to achieving these benefts should be evaluated. Moreover, the advantages of product attribute
and brand equity development alternatives and their effect over any negative COM effects
should be considered. Other factors such as trade barriers, labor, transportation or distribution
costs, and technology transfer may prove to be more viable reasons behind manufacturing and
sourcing location.

Chinese companies can create higher brand awareness and build brand strength either through
marketing and advertising of an existing Chinese brand, such as the case of Haier, or through
acquisition and/or association with an already existing strong brand, such as the case of Lenovo
and IBM. With Haier, the critical marketing component for its growing brand recognition is its
accessibility to the U.S. consumer through distribution and product availability. For Lenovo,
the focus has been more on acquisition, advertising and publicity. In both these cases, the other
critical factor to its continued brand building is a good, quality product. These are some of the
lessons that Chinese automobile manufacturers, can derive from those already in the developed
markets. Most recently, Geely has in fact resorted to the strategy of acquisition of a strong
brand through its purchase of Volvo. This approach has also been popular with India-based
Tata Motors and its acquisition of established luxury auto brands Jaguar and Land Rover. In
addition, Geely has also decided to dissolve the Geely brand by 2012 (Glucker, 2010) and
build its other sub-brands (such as Gleagle, Emgrand, Englon and now Volvo). As Geely or
Chery gear up towards a U.S. market entry, they frst need to realize their brand weakness and
focus on efforts to deal with the disadvantage. At the same time, they also need to ensure that
their product quality is built and maintained. The study also suggests that dealing with negative
COO effects, including both COM and COB, is even more critical given the high-value product
category that these Chinese automakers are in.
While this paper provides further insight into the COO effects, with respect to China, from
the perspective of the U.S. consumer, additional research is needed. The study was limited in
terms of geography and respondent characteristics. A broader, nationwide or multi-country
study with a more extensive sample would include additional COO effects related to other
18
developed and less-developed markets besides China and the U.S. This would improve the
generalizability of the results and could clarify the COO effects (e.g. foreign vs. Chinese).
The product categories were also limited to three moderate to high-priced, high-value items.
Comparisons with other types of products and product categories need to be considered.
Auxiliary investigation into the moderating effects of familiarity and other variables can also
supplement our understanding of COO. Nevertheless, the study offers additional evidence of
what Chinese frms are faced with, and what they can do in response as they venture farther in
their globalization efforts.
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Asian Journal of Business Research Volume 1 Number 2 2011
Standardization or Adaptation in International Advertising
Strategies: The Roles of Brand Personality and Country-Of-
Origin Image
Xuehua Wang
Shanghai University of Finance and Economics
Zhilin Yang
Victoria University of Wellington
Abstract
This study investigates the issue of standardization and adaptation in international advertising
from a consumer perspective by focusing on two variables, i.e., brand personality and country-
of-origin (hereafter COO). Results reveal that brand personality is positively related to a more
adaptive approach by frms; whereas COO image is found to exert a positive infuence on a
more standardized approach by frms. Implications for research as well as for practice are
discussed.
Keywords: Brand personality, Country-of-Origin, Standardization, Adaptation, International
Advertising.
Introduction
The issue of international advertising standardization and adaptation has remained unresolved
during the last several decades (Agrawal, 1995; Papavassiliou and Stathakopoulos, 1997).
International advertising standardization refers to utilizing the same or similar advertising
messages across different countries or areas; international advertising adaptation is defned as
using different advertising messages in separate markets (Kotler, 2008). However, there are no
absolute international adaptation practices or advertising standardization across boundaries.
Academics have gradually recognized the importance of a contingency approach, which argues
that the best advertising strategy needs to be carefully determined depending on an analysis
of factors inherent in the particular situation or environment at hand (Buzzell, 1968; Miracle,
1968; Ryans, 1969). By answering this call, Papavassiliou and Stathakopoulos (1997) have
conceptually developed a framework to summarize the relevant factors that impact the choice
of the appropriate international advertising strategies; these factors include local environmental
determinants, frm environmental determinants, and intrinsic determinants. However, few
studies focus on the infuence of specifc determinants pertaining to the extent of standardization
or adaptation of international advertising strategies.
26
To address this gap, this study aims to investigate the issue of international advertising
standardization and adaptation from a specifc consumer profle perspective, specifcally
focusing on two factors, i.e., brand personality and COO effect, which are found to be signifcant
in infuencing consumer decision making (Wang and Yang, 2008).
Consumers purchase branded products not only for their functional benefts, but more
importantly for the symbolic meanings embedded in products (Veryzer, 1995). Symbolic brand
benefts refer to the signaling effects shown to others when consuming the brand (Keller, 1993).
In addressing the symbolic meanings contained in products/brands, several important research
areas emerge; among them are brand personality and COO image.
Brand personality denotes the phenomenon that a brand is frequently related to various human
personality characteristics, such as fashion-consciousness, prestige, and being down-to-earth
(Aaker, 1997). Brand personality has been found to be positively associated with consumer
preferences, such as usage, loyalty, trust, feelings of comfort, and confdence in consumers
minds (Biel, 1993; Fournier, 1998; Sirgy, 1982). Therefore, brand personality is an important
factor to consider when frms enter markets in different countries. However, it remains a
question as to whether, or to what extent, a frm should standardize or adapt its international
advertising strategy when its brand personality is strongly/weakly perceived by local consumers
(Barich and Philip, 1991; Wang, Yang, and Liu, 2009). Empirical evidence is also lacking as to
how brand personality affects a frms international advertising standardization and adaptation
strategies. In addition, it is found that the advertisements of each country ideally display a
certain degree of sensitivity to the brand personality characteristics of the specifc local market
(Mueller, 1987). It may be expected that the stronger the local brand personality characteristics,
the more adaptive to local culture the international advertising strategy tends to be. Therefore,
the frst objective of this study is to investigate the impact of brand personality on international
advertising strategies.
Country-of-origin refers to the country with which a manufacturers product is associated
(Saeed, 1994). COO image describes the stereotypic perception that consumers hold toward
the countrys representative products or brands (Nagashima, 1970; Roth and Romeo, 1992).
Prior relevant literature fnds that consumers vary in their evaluation of products/brands from
different countries; hence, these variations infuence their attitudes and purchase intention
toward the products/brands (Roth and Romeo, 1992; Schooler, 1965; Yasin et al., 2007). This
COO concept can help international advertising managers to understand, in considerable detail,
the target market so as to develop more effective advertising messages (Papavassiliou and
Stathakopoulos, 1997). In addition, it is diffcult for consumers to change this stereotypic COO
image perception regarding a specifc product/brand from a particular country; thus, frms
ought to make full use of these COO image stereotypes, instead of trying to change them
dramatically (Roth and Romeo, 1992; Wang and Yang, 2008). Therefore, it may be suggested
that COO image could exert a positive infuence on international advertising standardization.
However, it lacks empirical evidence as to how COO image infuences the extent of international
advertising standardization and adaptation; thus, the second objective of this study is to examine
the relationship between COO image and the extent of international advertising standardization
and adaptation.
Given the foregoing, the objectives of this study are to examine the infuences of brand
27
personality and COO image on the extent of standardization and adaptation in international
advertising strategies, respectively. Subsequently, we will review and elaborate on relevant
conceptual background, and then, further develop research hypotheses.
Conceptual Background and Hypotheses Development
Standardization and Adaptation of International Advertising
When going international, frms must consider different degrees of two types of advertising
strategies, i.e., standardization and adaptation. This topic has attracted enormous attention
during the last several decades (e.g., Buzell, 1968; Ghoshal, 1987; Levitt, 1983; Papavassiliou
and Stathakopoulos, 1997; Solberg, 2001). Standardization of international advertising
strategy is defned as utilizing the same, or common, advertising messages on an international
basis, since the worldwide marketplace has become increasingly homogeneous, to the extent
that international frms can market standardized products/services all over the world through
identical advertising strategies, principally due to such infuences as TV, movies, and the
Internet (Jain, 1989). The rationale behind this position is that consumers in different countries
or areas share the same, or very similar, wants and needs; therefore, they can be persuaded by
universal advertising appeals (Buzell, 1968; Fatt, 1967; Killough, 1978; Levitt, 1983). Such an
international advertising strategy can result in substantial media and production cost savings,
because the multinational company needs only to develop a common advertising campaign
across world markets.
By contrast, adaptation of an international advertising strategy suggests that each market must
be considered, for the most part, as a distinctly separate unit and adaptations must be made
accordingly (Pratt, 1956, p.172) due to differences in culture, economic status, legal conditions,
and foreign market media. In the 1960s, academicians gradually shifted towards the contingency
approach when using international advertising, indicating that whether to standardize or not is
not a dichotomous decision, and that there are various degrees of international advertising
standardization and adaptation, depending on analysis of the factors relating to the particular
situation or environment at hand (Buzzell, 1968; Miracle, 1968; Ryans, 1969).
Papavassiliou and Stathakopoulos (1997) develop a conceptual framework to capture
the related factors that impact the degrees of adaptation or standardization in international
advertising. One of the most important determinants is consumer profle, which encompasses
the demographic, psychographic, and behavioral characteristics of consumers in the host
country (Papavassiliou and Stathakopoulos, 1997). However, relatively few articles deal with
the infuence of consumer-related characteristics on the degree of standardization or adaptation
in international advertising strategy; thus, this study intends to contribute new insights in this
area by addressing two related infuential factors in consumer decision making, i.e., brand
personality and COO image.
Brand Personality
Aaker (1997) defnes brand personality as the human traits associated with a specifc brand;
Sweeney and Brandon (2006) further consider this concept from the perspective of interpersonal
relationship with the brand and regard brand personality as those human characteristics
corresponding to the interpersonal relationship that are relevant to depicting the brand as a
relationship partner. Consumers imbue different brands with different brand personalities. For
28
instance, consumers may portray the brand of Levis as a brave, modern, and swaggering young
man; while the brand of Coca-Cola may be personalized as a more traditional, family-oriented,
and conservative man. Brand personality relates to the symbolic values possessed by a brand
(Keller, 2003). Through association of brands with human personality characteristics and by
consuming the brands, consumers can enhance their self-concept (Belk et al., 1982).
Consumers in different cultures tend to prefer different brand personality characteristics. For
instance, in Eastern countries, the traditional brand traits such as family, down-to-earth, and
friends are more generally preferred; whereas in Western countries, consumers may attach more
value to such brand personality characteristics such as individualism, creativity, and risk-taking.
At the same time, as globalization intensifes, more and more people in different cultures share
certain similar or common brand traits, such as prestige and social status. Thus, an important task
for international advertising managers is to decide the degree of standardization and adaptation
of international advertising when extending their campaigns to different cultures. In practice,
the advertisements of each country ideally display a certain degree of sensitivity to the cultural
uniqueness and to the brand personality characteristics of the specifc local market (Mueller,
1987). Thus, the stronger the local brand personality characteristics, the more adaptive to local
culture the international advertising strategy tends to be. Hence, we hypothesize that:
H1: Local brand personality strength tends to be positively related to the degree of adaptation
of international advertising strategies.
COO Image
COO image is important in affecting consumers perceptions toward products/brands from a
given country (Johansson, Douglas, and Nonaka, 1982; Saeed, 1994; Ahmed, Johnson, and Boon,
2004), and can further infuence purchase intention (Roth and Romeo, 1992; Papadopoulos and
Heslop, 1993). Hong and Wyer (1989) fnd that COO image is positively related to consumers
product quality evaluations. Thus, if a country possesses a positive image on particular product
category dimensions important for product classifcation and evaluation, then consumers would
hold favorable attitudes toward products of this category from that country (Roth and Romeo,
1992). For instance, when talking about fashionable clothing, people would think favorably of
brands originating in Italy.
The COO image concept can help international advertising managers to understand more
thoroughly their target market and thus develop a more suitable advertising program for
the local market. For instance, Germany is famous for making cars and also enjoys a good
reputation throughout the world. Thus, a joint venture company in China, collaborating with its
German partner, can make good use of the particular and positive COO image of Germany, and
thus develop advertising messages specifcally emphasizing such a COO image. An important
characteristic of COO image is that it represents a stereotypic perception toward a specifc kind
of product or brand manufactured in, or originating from, a particular country (Lin and Chen,
2006). It is not easy for consumers to change this stereotypic COO image perception in the
short term; thus, companies should utilize these image stereotypes, instead of trying to change
them dramatically (Roth and Romeo, 1992). Hence, the stronger the COO image is, the more
standardized the international advertising strategy tends to be when using COO-related ad
messages. Therefore, we hypothesize that:
29
H2: COO image tends to be positively related to the extent of standardization of international
advertising strategy.
Research Methodology
Questionnaire and Measures
The questionnaire included two sections. The frst section measured three factors (Brand
personality, COO image, the perceived extent of standardization in international advertising);
the second part recorded respondent demographic information. The questionnaire was originally
in English; then it was translated and back-translated into Chinese until acceptable translation
accuracy was achieved.
Brand personality was measured by adapting Aaker (1997)s fve-dimensional scale, including
sincerity (inclusive of down-to-earth, honest, wholesome, and cheerful), excitement (daring,
spirited, imaginative, and up-to-date), competence (reliable, intelligent, and successful),
sophistication (upper class and charming) and ruggedness (outdoorsy and tough) on a 7-point
scale with a Cronbachs alpha reliability coeffcient of .92. Based upon Table I, the correlation
coeffcients for the four components of brand personality (i.e., sincerity, excitement, competence,
and sophistication) were in the range of 0.69 to 0.74, which were all signifcant at the p < .01
level. In addition, each of the four components was highly correlated with the overall scale of
brand personality (.80 or above).
Table I: Correlations among the Four Components of Brand Personality
Sincerity Excitement Competence Sophistication
Brand
personality
Sincerity 1.000
Excitement .69* 1.000
Competence .72* .70* 1.000
Sophistication .74* .71* .72* 1.000
Brand
personality
.89* .87* .85* .80* 1.000
Note: *Statistically signifcant at p < .01 level.
Roth and Romeo (1992)s scale was adapted to measure COO image. It includes four
dimensions: innovativeness (using new technology and engineering development level),
design (appearance and style), prestige (status and reputation), and workmanship (reliability,
durability, craftsmanship, and quality). Nine items with anchors ranging from 1 absolutely
disagree to 7 absolutely agree, with a Cronbachs alpha reliability coeffcient of .91, were
used for measurement. Results presented in Table II showed that correlations among the four
components of COO image ranged from 0.51 to 0.63 and all were statistically signifcant at the
p < .01 level. Each component was highly correlated with the overall measure of COO image
(.77 or above).
30
Table II: Correlations among the Four Components of COO Image
Innovativeness Design Prestige Workmanship COO image
Innovativeness 1.000
Design .51* 1.000
Prestige .52* .59* 1.000
Workmanship .61* .63* .57* 1.000
COO image .78* .81* .77* .89* 1.000
Note: *Statistically signifcant at p < .01 level.
We used a subjective measure for the perceived extent of standardization and adaptation
of international advertising, such as the communication platform, creative idea, or concept
(Solberg, 2002; van Raaij, 1997). The concept was captured by using fve items including
To what extent do you consider that the advertising of the brand is standardized in terms of
(1) its selling argument; (2) its main idea; (3) its text; (4) its endorsers; and (5) its product
associations with a Cronbachs coeffcient alpha of 0.88. The fnal pool of measurement items
was determined by soliciting suggestions from experts in this feld.
Finally, all measures were subjected to a confrmatory factor analysis (CFA) to check validity
issues. The CFA allows for a validity evaluation of the measures used. The ft indices (/df =
1.92, p = .000, goodness-of-ft index [GFI] = .91, adjusted goodness-of-ft index [AGFI] = .90,
confrmatory ft index [CFI] = .95, normed ft index [NFI] = .93, root mean squared error of
approximation [RMSEA] = .04) suggest a good ft of the measurement model. All items loaded
signifcantly (critical ratio [CR] > 1.96) on their corresponding constructs. Therefore, evidence
of trait validity is provided for the dependent measures (Anderson and Gerbing, 1988).
Sample and Data
College students in Macau were recruited as our sample respondents. First they were required
to watch two TV editions of four brands in four product categories (i.e., beer, cola, razors, and
clothes); these brands were Budweiser for beer, Coca-Cola for cola, Gillette for razors, and
Levis for clothes, which were all familiar to youngsters in China. The two TV editions for
each brand were from the U.S. and mainland China, respectively. There were two reasons that
we use students in Macau to watch ads from U.S. and mainland China. First, Macau is adjacent
to Mainland China and has been greatly infuenced by Mainland Chinas consumption culture,
since it is a tiny place with limited resources. Thus, the cultural difference between Macau and
mainland China is relatively small. Second, most of the university students that we sampled
were from the Chinese mainland (72.9%). Subsequently, each student in the sample was asked
to complete the questionnaire based upon his/her understanding of these different ads. Three
hundred and ffty six questionnaires were distributed. Two hundred and sixty one usable
questionnaires were fnally collected with a response rate of 73.3%. There were 145 female
(55.6%) and 116 male respondents (44.4%). Ages of respondents were primarily between 20
and 23 years old (92.7).
31
Results
Regression analysis was used to test the two hypotheses, after controlling for gender and
age. Gender was dummied in the regression analysis. It was hypothesized by H1 that brand
personality would be positively related to the extent of adaptation of international advertising
strategy. According to Table III, regression results indicated that brand personality produced a
signifcant and positive standardized coeffcient (.21) on the extent of adaptation of international
advertising strategy, thus supporting H1.
Table III: Hierarchical Regression Analysis Results (DV: The Extent of Ad Adaptation)
Explanatory Variables Beer Cola Razors Clothes
Gender .11* .03 .09* .08*
Age .05 .04 .02 .03
Brand personality .12* .07* .25* .15*
COO image -.10* -.09* -.29* -.11*
Constant 3.22 2.71 2.94 3.76
F
11.43
(p < .001)
9.05
(p < .001)
17.82
(p < .001)
14.13
(p < .001)
R
2
.21 .14 .30 .23
Overall model p value .000 .000 .000 .000
Note: * p < .01.
H2 predicted that COO image would exert a negative infuence on the extent of adaptation
of international advertising strategy. Based on models 2 and 3 in Table III, regression results
revealed that COO image was negatively and signifcantly related to the extent of adaption in
international advertising with a standardized coeffcient of -0.27. Therefore, H2 was supported.
We also split the database based on the four product categories (see Table IV). We found that the
cola product category produced less signifcant results than other three categories. Specifcally,
for the cola sample, the standardized regression coeffcients for brand personality and COO
image were 0.07 and -0.09, respectively. In contrast, the razor product category generated
stronger signifcant results than other three product categories. Specifcally, the standardized
regression coeffcients for brand personality and COO image were 0.25 and -0.29, respectively
for the razor sample. This fnding indicated that the effectiveness or impact of brand personality
and COO image on the extent of adaptation of international advertising may depend on product
categories.
32
Table IV: Standardized Regression Coeffcients across Different Product Categories
(DV: The Extent of Ad Adaptation)
Explanatory Variables Model 1 Model 2 Model 3
Gender
Age
Brand personality
; (.21)
1
;

(.27)
2
; (.20)
1
; (.25)
2
COO image
; (-.27)
1
;
(-.29)
2
Constant 2.19 2.98 3.86
F
7.81
(p < .001)
12.79
(p < .001)
14.95
(p < .001)
R
2
.12 .25 .29
R
2
change .12 .13 .04
Adj- R
2
.10 .23 .27
Overall model p value .000 .000 .000
Notes:
1
is the standardized regression coeffcient;
2
is the unstandardized regression coeffcient.
Discussion
This study investigates the relationship between brand personality, COO image and the extent
of standardization vs. adaptation in international advertising strategy, which no prior studies
have explored empirically. Results reveal that the stronger the brand personality, the more
adaptive the international advertising is to local consumer needs and wants; COO image is
found to be negatively related to the extent of adaptation of international advertising due to its
stereotypic characteristic. Implications for research as well as for practice will be discussed.
The stronger the brand personality, the stronger the extent of adaptation of international
advertising tends to be. Different consumer segments across the world attach different personality
characteristics to the same object. For instance, the color of red is associated with active, hot or
enthusiastic in Asian countries; in contrast, red is poorly received in African countries. Thus,
in line with this prior relevant research, this study fnds that advertising messages have to be
adapted to local brand personality perceptions to achieve higher acceptance rate (Melewar and
Vemmervik, 2004).
COO image is found to be negatively related to the extent of adaptation in international
advertising. COO image represents the stereotypic perception that consumers hold toward the
countrys typical products/brands (Roth and Romeo, 1992; Bluemelhuber et al., 2007). One
important role played by COO image is called the halo effect (Han, 1989). That is, when
consumers are not familiar with a product/ brand, they rely primarily on the halo effect to infer
product/brand attributes, thus affecting their product/brand attitudes. Moreover, it is not easy
to change COO image of a particular country toward its representative products/brands in the
short term; thus, because of this COO image characteristic, multinational companies need to
use a high extent of standardization in their international advertising strategy to optimize COO
advertising appeal.
33
Another fnding is that the cola sample generated less signifcant results than the other three
product categories for brand personality and COO image. This may be due to the fact that
Coca Cola has enjoyed a unifed brand image and comparatively similar brand personality
characteristics across the world. Thus, the effect of brand personality and COO image for
cola was not so evident as for the other three product categories. In addition, we also found
that the razor sample generated more signifcant standardized regression coeffcients than the
other three product categories. The razor advertisement of the US version featured male-female
intimacy and the endorsers were foreigners; whereas the China version was related to friends
and work scenarios and the endorsers were Chinese. After students watched the two ads, they
were required to imagine that the two endorsers in the US version were replaced by Chinese;
some students responded that such an intimate advertising scenario would make them feel
uneasy, which may be due to the cultural differences between Eastern and Western values.
Our fndings also tell us that the effect of consumer profle variables may be dependent on
advertising campaigns and product categories.
Managerial Implications
The fndings of this study can also be helpful for multinational companies in dealing with the
issue of the extent of standardization and adaptation in international advertising. First, quality
survey research on local consumer attitudes toward brands can help international advertising
managers understand, in considerable depth, the various brand personality associations in
different countries or areas, which further assist the development of local advertising programs.
Second, in designing advertising messages that emphasize the COO image of a specifc brand,
international companies can, to a greater extent, standardize their advertising campaigns across
world markets so as to save media and advertising costs.
Third, the effects of brand personality and COO image may vary across different advertising
appeals and product categories. Thus, multinational companies need to gain insights into each
product/brand category and conduct research on different advertising campaigns in order to
determine the extent of standardization or adaptation in their advertising strategy.
Limitations and Future Research
Limitations of this study, as well as directions for future research, need to be noted. We did
not consider brand familiarity or brand involvement as control variables, which may infuence
the quality of our results. Some students may already hold favorable or unfavorable views
toward the brands investigated. Future research should reduce this sample bias to achieve more
generalizable results.
In addition, college students were used as our sample respondents, which may limit the
generalizability of our results. For future research, it is desirable to recruit more diverse consumer
segments in order to produce more insightful results. Another direction for future studies is to
take product categories into consideration, since the effects of brand personality and COO image
depend on product categories.
Finally, we recognize that there are other variables that can infuence the extent of standardization
and adaptation of international advertising, such as self-concept, personality-related constructs,
and consumption patterns in different cultures; thus, future studies need to incorporate these as
well as other factors to capture a more complete picture of this phenomenon.
34
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37
Asian Journal of Business Research Volume 1 Number 2 2011
Impact of Quantity and Timeliness of EWOM Information
on Consumers Online Purchase Intention under C2C
Environment
Fu Xiaorong,
Zhang Bin,
Xie Qinghong,
Xiao Liuli,
Che Yu.
Southwestern University of Finance and Economics
Abstract
Based on consumers cognitiveaffectivebehavior hierarchy theory of reaction, this
paper builds the relational model of electronic word-of-mouth (eWOM) information (from
two dimensions, quantity and timeliness), consumer trust, and purchase intention under C2C
environment. The 222 between-subjects experiment on 320 undergraduates in Southwestern
University of Finance and Economics illustrates that quantity and timeliness of eWOM
information have signifcant infuences on consumer trust, which has signifcantly positive
infuence on purchase intention; and the effect of the quantity and timeliness of eWOM
information on consumer trust is also affected by the difference of product category. When
buying fashion product (such as fashionable dress), the infuence of quantity and timeliness
of eWOM information on consumer trust is greater than that on functional products (such as
books).
Keywords: C2C, WOM, Consumer trust, Purchase intention
Introduction
Along with the booming of Internet and e-commerce, more and more people begin to shop on the
Internet. Therefore, consumers online purchase behavior has attracted attention both from the
academic circle and the business entities. Literature shows that features of eWOM information
have strong infuence on online purchase behaviors. Currently, eWOM information has two
dimensions, quality and quantity. The quality dimension refers to the features which include
path of communication, type, longevity, timeliness, etc (Kozinets, 1999; Park and Lee, 2007;
Jin Liyin et. al, 2007). However, researches on timeliness of eWOM information were limited
and divergent. Some researchers thought the higher the perceived timeliness of the message
is, the greater the usefulness of the message is, and the greater the online purchase intention
is (Doll and Torkzadeh, 1988; Madu and Madu, 2002; Cheung et al, 2008). However, Zheng
38
Xiaopings research (2008) found that this information feature has no signifcant infuence on
online purchase intention. Why are the research results different from each other? According
to some researchers, product type will infuence consumers reliance on online messages and
further impact their online purchase behaviors (Nelson, 1970; Senecal, et al, 2004; Bei, 2004;
Song, 2005). We have to consider whether the difference in product type is the factor resulting
in this difference. And whether the infuences of eWOM information quantity and timeliness on
consumer trust and purchase intention are different when the consumers purchasing different
products?
Therefore, this paper tried to introduce product type as a variable to analyze the integrated
infuence of product type, quality, and timeliness of eWOM information on consumers online
purchase behaviors. With abundant information about the infuence of eWOM information
on consumers online purchase behaviors, this paper hopes to help e-commerce companies to
process eWOM information effectively with limited resources, enhance consumer trust, satisfy
their individual demands, and win more customers.
Literature Review
A majority of researches argued that eWOM information has signifcant infuence on online
purchase behaviors. Kozinets (1999) stated that eWOM information could effectively decrease
consumers doubts formed from online purchase such as perceived risk, information asymmetry,
information absence, etc., so that it can help consumers make purchase decisions. According
to Jupiters research in 1999, eWOM information is an important source for customers to
get information about the product because 57% of customers would look through online
consumer reviews (Godes, 2004). Forresters research (2000) indicated that more than 50%
of young customers would purchase movies, CDs and games according to recommendations
from eWOM information. Park and Lee (2007) argued that as a part of eWOM information,
online consumer reviews on specifc products are valuable information formed from their past
experiences. Therefore, the reviews are quite infuential and useful for other customers to make
purchasing decisions.
The current research of eWOM infuence mechanism
How does eWOM infuence consumer buying decision? Smith (2002) investigated the infuence
of consumers recommendations on consumer decision-making in virtual community in his
doctoral dissertation. In this study, he used three variables (individual difference, features of
recommendations and buying target) to describe the infuence of eWOM on consumer decisions.
He thought that the trust is the mediator variable and target is the moderator variable in this
process. His study drew two conclusions: First, trust was the mediator variable which helped
to realize the infuence of eWOM information on consumer decision; second, the infuence of
eWOM information on trust varied in different buying environments and for different products.
Smith Menon & Sivakumar(2005) further discussed the above mentioned results in their
following researches. They carried out emulational decision-making experiment to study the
infuence of WOM on online consumer decision-making. The two empirical studies demonstrated
that lots of online consumers would actively look for and accept related information to improve
information searching effciency. This indicated that consumers are always in the state of high
involvement.
39
Komiak (2003) studied the infuence of Recommendation Agents (including features like
internalization and familiarity) on consumer adoption intention and decision-making in
e-commerce environment. The study argued that internalization and familiarity infuence
ability-based trust, benevolence-based trust, integrity-based trust and affection-based trust,
therefore ultimately infuence consumer adoption intention and cognition-assisted preference.
On the other hand, ability-based trust, benevolence-based trust, and integrity-based trust bring
impact over affect-based trust.
Chen Beilei (2008) divided the factors which infuence eWOM communication into three
aspects: source, message, and acceptor. Source refers to the expertise, affability and creditability
(Rogers, 1995), as well as religion, identity, status, ethics, etc.. Message includes opinions,
appeals and conclusions. Acceptor encompasses its ideas, involvement, perusability and
characteristics. These contributed to the infuencing model of eWOM information on consumer
purchasing decision.
Xu Lin (2007) illustrated the power of eWOM depending on its creditability. This study
found fve aspects that are strength of relationship between information publisher and reader,
the reliance of reader on eWOM communication platform, readers perceived usefulness of
web sites, risks involved and propensity to trust have signifcant positive impact on eWOM
creditability.
Generally speaking, existing researches on eWOM model have drawn two conclusions: First,
the infuence of eWOM on consumer purchase intention depends on three factors: features
of information contributor, features of information and recipients individual characteristics;
second, in the infuence mechanism of eWOM on buying intention, trust is the most important
mediator variable. That is, the three variables infuenced consumer trust frst and then on buying
intention. At the same time, product type played a moderating role in the process of trust
development. Therefore, this paper focuses on the infuence mechanism of eWOM information
on consumer buying intention.
The current research of eWOM information
Current studies have analyzed the infuence of eWOM information on customer online purchase
behaviors. Park and Lee (2009) used experimental study to analyze the infuence of direction
of eWOM, website reputation and product type on the effect of eWOM communication.
The research showed that the infuence of negative WOM information is much greater than
that of the positive one, the impact of WOM information from websites with reputation is
much greater than that from websites without reputation, and product type plays a signifcant
moderating role in the process. The empirical research on eWOM creditability carried out
by Xu Lin (2007) found that the strength of relationship between consumer and information
publisher, consumer reliance on eWOM communication platform, their perceived usefulness
of websites, risks involved, and propensity to trust have signifcant positive impact on eWOM
creditability. Jin Liyins research (2007) indicated that type of word-of-mouth information, the
direction of communication and the product involvement have signifcant positive infuence on
consumer purchase decisions. Furthermore, the interconnection among the three factors also
has signifcant positive impact on the effect of eWOM communication. Zheng Xiaoping (2008)
divided online consumer reviews into four types, which are content, creditability, timeliness,
40
and quantity. He found that content, creditability and quantity bring signifcant positive
impact over buying decision, but timeliness has no signifcant infuence on buying decision.
Xi Hes research (2008) illustrated that contributors expertise, recipients propensity to trust
and perceived risk have signifcant infuence on the effect of eWOM information. However,
features of eWOM information and recipients expertise do not bring any signifcant impact
over the effect of eWOM. Chen Mingliang and Zhang Jingjings research (2008) on factors
which infuence eWOM diffusion intention demonstrated that interestingness of content is
the most important factor, followed by source creditability, recipients altruist motivation and
the self-promotion motivation. However, the extroversion of recipients characteristics has no
signifcant infuence on eWOM diffusion intention.
The current literature has presented a large amount of analyses about the infuence of eWOM
information features on online purchase behaviors. However, the current researches have
two shortcomings. On one hand, there are limited researches on the interconnection effect of
quantity dimension and quality dimension, which are two dimensions of eWOM information.
On the other hand, the research on timeliness, the dimension that derives from information
quality is also limited and divergent. Therefore, this paper hopes to investigate the infuence of
quantity and timeliness on consumer trust and purchase intention. Specifcally, the quantity of
eWOM information refers to the scale and amount of electronic comment on specifc product or
service. And timeliness of eWOM information means the length of interval between publishing
and viewing online.
Consumer trust under C2C environment
According to Social Exchange Theory, consumer trust under C2C environment plays a key role.
Social exchange theory is about the rules and regulations controlling resource exchange among
people (Frenzen and Nakamoto, 1993). These resources include the economic value of tangible
product, the related experience and symbolic value of intangible product or service. Therefore,
word-of-mouth is also regarded as a form of social exchange (Gatignon and Robertson, 1986;
Frenzen and Nakamoto, 1993). In this exchange, the status of trust will be promoted because
of high uncertainties and risks (Molm, Takahasi and Peterson, 2000).
Under C2C environment, the participants undertake more risk than in the real world. Therefore,
we give a new defnition of consumer trust under C2C environment. Corritore and Kracher
(2003) thought that online trust is a kind of attitude, a trustworthy expectation that their
vulnerability wont be attacked in online environment. Pavlou (2003) held the view that trusts
in e-commerce trade includes the creditability and benevolence of the trustee. Some researchers
proposed three dimensions of trust in e-commerce environment, which are the trustees ability,
benevolence, and integrity (Bhattacherjee, 2002; Gefen, 2003). Based on the above mentioned
defnition, this paper adopts that consumer trust under C2C environment refers to consumers
perceptions of online sellers ability, benevolence and integrity, and the consumers intentions
and expectations which are based on the above aspects.
A lot of researchers thought the formation of consumer trust under C2C environment relies
on three aspects, which are the formation of trust on process, feature, and institution (Zucker,
1986). Kim and Prabhakar (2002) demonstrated that consumers propensity to trust, word-of-
mouth and security guarantee are the factors that infuence consumer in forming initial trust.
Kim et.al (2005, 2008) constructed the process-oriented multi-dimensional model of online
transaction. This model proposed four classifcations that infuence consumer trust and their
41
perceived risks of e-commerce entity, which includes cognition, emotion, experience and
characteristics. This paper researches the infuence of eWOM information on cognition-based
consumer trust.
Consumer trust is regarded as the most important factor that infuences the success of
e-commerce transaction (Gefen et al, 2000). Due to uncertainty of sellers behaviors or the
perceived risks such as the loss of personal information through hacker attack, consumers often
hesitate about the transaction with online sellers (McKnight et al, 2002). Therefore, trust plays
a key role in helping consumer overcoming perceived risk and uncertainty. Gefen and Straub
(2000) thought that the predictable variable that infuences trust is a common phenomenon,
and online trust formed in online service is positively related to consumer purchase intention
(Cheung and Lee 2006; Gefen and Karahanna 2003; Kim and Steinfeld 2008; Pavlou 2003;
Pavlou and Gefen 2004; Suh and Han 2003).
Research model and research hypotheses
Literature review about the infuence of eWOM information on purchase intention discovered
that consumers will actively look for and evaluate information (Smith Menon & Sivakumar,
2005). Their decisions are made with high involvement and trust is the most important mediator
variable in the process. Therefore, based on consumers cognitive affective behavior
hierarchy theory of reaction, this paper builds the relational model of eWOM information
consumer trust purchase intention, and introduces product type as moderator variable to
analyze the infuence mechanism of eWOM information feature on online purchase behaviors.
The model is shown in Figure 1.
Figure 1: The model of eWOM information, consumer trust and purchase intention
H4
H
H2
H1

Consumer
trust
Purchase
inetntion
eWOM
information
quantity
eWOM
information
timeliness
Product type
Cognitive Affective Behavior
Product
type type
Control variable:
eWOM information direction is positive and of high
quanlity
eWOM information is positive valuation
eWOM information is of adequate longevity
H5
42
The relationship among eWOM information quantity, timeliness, and trust
Under C2C environment, people will feel that the majoritys behaviors are trustworthy when
they are in uncertain context. Chen and Dhanasobhon (2007) carried out specifc research on
online transaction, pointing out that online evaluation message is helpful for consumer to make
buying decision. Consumers would look through messages to evaluate the quality of the product
online to eliminate doubts for online shopping and establish trust between buyers and sellers.
Ren Chunhua and Liu Yezhengs empirical research (2009) found that eWOM information
quantity is positively related to information creditability. Therefore, this research argues
H1: The larger the quantity of eWOM information, the greater the extent of consumer trust.
Doll and Torkzadeh (1988) proposed that in online environment for end-users, eWOM
information timeliness is one of the most important factors that infuence perceived quality
of products. Madu and Madu (2002) urged that when the web site is not updated consistently,
the web site cannot deliver the expected performance and therefore provides no added value to
users. Cheung et als research (2008) also proved that the higher the timeliness of message, the
higher the creditability perceived by consumers. However, Zheng Xiaoping (2008) found that
the infuence of timeliness on online purchase behavior is insignifcant. This paper holds the
view that when consumer purchase product that will lose value rapidly as time goes by, they tend
to think that todays reviews are of different value from the reviews (with the same content) left
one year ago. Based on the analysis, this research proposes that eWOM information timeliness
has signifcant impact on consumer trust.
H2: The higher the timeliness of eWOM information, the greater the extent of consumer trust.
The moderating effect of product type
Nelson (1970) thought that consumer relies heavily on recommendations when they are
buying product whose quality could be confrmed only after the purchasing behavior. It is
different from buying product whose quality could be confrmed before purchasing behaviors.
Senecal, et al (2004) proved this point through experimental study. Bei et.als research (2004)
revealed that consumer who is buying experiencing products tends to rely heavily on eWOM
information, while consumer who is buying searching products will not depend on eWOM
information to a great extent because retailer and manufacturers introductions to searching
product are more useful. Song (2005) argued that different product types will produce different
infuences to consumer. Consumers who buy experiencing product and entertainment product
like movies are easier to be infuenced by eWOM information. According to literature review,
the experiencing product whose quality could be confrmed only after purchasing behavior is
called fashion product, while the searching product whose quality could be confrmed in the
process of information searching is called functional product. Based on the conclusion, this
research argues
H3: The infuence of eWOM information quantity on consumer trust when buying fashional
product is more signifcant than that of the functional product.
Zheng Xiaoping (2008) revealed in the empirical study that the infuence of eWOM information
timeliness on consumer purchase decision is insignifcant. Try to consider if the value of todays
43
reviews is the same or different when you are buying the fast-depreciating product and the
slow-depreciating product. Therefore, this research proposes that due to difference in product
type, the infuence of eWOM information timeliness on consumer trust varies. Therefore, it is
argued that
H4: The infuence of eWOM information timeliness on consumer trust when buying fashion
product is stronger than that of functional product.
The relationship between trust and online purchase intention
Azjen and Fishbeins research (1980) found that trust and purchase intention is related. Bowen
and Shoemaker (1998) argued that consumers are willing to positively publicize the frms
they like and trust then they tend to repurchase the product and service the frms provide.
Gefen (2000) stated that consumer trust has direct infuence on online purchase intention.
Furthermore, Kimery and Mccord (2002) argued that trust established in the process of online
shopping helped to decrease consumers cognition of perceived risks. Trust is positively related
to online purchase intention. Koufaris and Hampton-Sosa (2004) and Gefen and Straub (2003)
suggested that trust could increase the extent of online users purchase intention. Liu Weijiang
(2005) built a model from the perspective of the features of e-commerce, explaining consumer
purchase behaviors in online environment. He thought that trust is the most important ingredient
that infuences consumer purchasing behavior, and trust is closely related to purchase intention.
Donnas empirical research (2006) also demonstrated that trust is positively related to online
shopping. Therefore, this paper proposes that
H5: Consumer trust has positive infuence on consumer purchase intention.
Method Overview
The objective of this paper is to demonstrate that the infuence of eWOM information quantity
and timeliness on consumer purchase intention is different when the customers purchase
different products. Therefore, we used a 222 between-subjects experimental design: eWOM
information quantity (large, small), eWOM information timeliness (high, low), and product
type (fashion product, functional product). It is designed to test the differences in consumer
trust and purchase intention among these groups.
Method
At the beginning of the experiment, participants looked through the product reviews in a web
page. The product type was either fashion or functional. The information that participants read
was different in terms of quantity and timeliness. After fnishing reading the information, they
expressed the degree of trust and their purchase intention.
Stimuli
This experiment adopted expert interview method to choose products for experiment. 20
university students with abundant experience in C2C online shopping participated in the group
interview. Based on the interview, we produced a product catalog. After the initial investigation
at the aspects of fashion, function, and purchase frequency, we chose the costumes for youth
(fashion product) and the books (functional product) as the products for experiment.
44
This research used the Delphi investigation method to measure eWOM information quantity and
timeliness. The 20 participants explained their understanding of the quantity and timeliness on
online messages of fashion clothes and books through email and QQ (a popular communication
tool on the Internet in China). The average calculated from the third investigation of 20
participants (the manipulated variable) is as follows:
Table I The measurement of eWOM information quantity and timeliness
Product type
The levels of eWOM
information quantity
and timeliness
Results
Costume
(fashion product)
Large quantity More than 38.5 pieces of messages
Small quantity Less than 6.1 pieces of messages
Books
(functional
product)
Large quantity More than 15.6 pieces of messages
Small quantity Less than 3 pieces of messages
Costume
(fashion product)
High timeliness Messages within 19.65 days
Low timeliness Messages beyond 58.5 days
Books
(functional
product)
High timeliness Messages within 47.5 days
Low timeliness Messages beyond 158.75 days
Procedure
320 undergraduates in Southwestern University of Finance and Economics participated in
the experiment for extra course credit. Participants were randomly assigned to one of eight
conditions of a 222 between-subjects experimental design: eWOM information quantity
(large, small), eWOM information timeliness (high, low), and product type (fashion product,
functional product).
We told the participants that the study was aimed at online flms and the experimenters who
are interested in how people form impressions based on product reviews. Followed by that, all
participants read online product reviews. In the small quantity condition, participants had three
minutes to read the reviews, while in the large quantity condition, they had six minutes. We also
told the participants that in order to get stable measurements of their impressions, they should
report their impressions at the same time.
40 undergraduates from the same subject product (the books) evaluated different information
quantity along a scale from one to seven. Results confrmed that the online reviews including 16
pieces of massages (M=4.53) were signifcantly larger than that of 3 pieces of massages (M=2.03;
F(1,78)=52.717; p<0.001). Also, the online reviews published within 48 days (M=4.85) were
signifcantly more timely than that published over 159 days (M=2.78; F(1,78)=36.89; p<0.001).
In customs context, results confrmed that the online reviews including 36 pieces of massage
(M=5.20) were signifcantly larger than that of 6 pieces of massages (M=2.75; F(1,78)=57.132;
p<0.001). Also, the online reviews published within 20 days (M=5.98) were signifcantly more
timely than that published over 59 days (M=3.73; F(1,78)=66.93; p<0.001).
45
After fnishing reading these online reviews, the participants fnished questions about consumer
trust and purchase intention. Consumer trust was measured by three dimensions proposed by
Bhattacherjee (2002): ability, integrity, and benevolence. As for purchase intention, we adopted
the four-item scale proposed by Jaeki Song et.al (2005).
Results
Manipulation Checks
Manipulation check is to assess whether online reviews quantity and timeliness are appropriately
manipulated. It suggests that the quantity of online reviews perceived by customers is larger
when it is presented in large quantity condition (M =4.77) than when it is presented in small
quantity condition (M=2.39; F(1, 236)=121.553.6; p <0.001). Also, as expected, participants
think online reviews are more timely when it is presented in high timeliness condition (M=5.49)
than when it is presented in low timeliness condition (M=3.43; F(1, 236) =102.319; p <0 .01).
Trust Evaluations
We expected that eWOM information quantity and eWOM information timeliness would affect
signifcantly on customer trust, and product type also affects customer trust by interacting with
information quantity and information timeliness. As shown in table 7, this is indeed the case.
The 22 2 ANOVA on consumer trust confrmes that the interaction of product type and
eWOM information quantity is signifcant (F(1, 237)=5.258; p <0 .05), and the interaction of
product type and eWOM information timeliness is also signifcant(F(1, 237)=3.028; p <0 .1).
The results shows the statistics of eWOM quantity (F=32.14, p0.01) and eWOM timeliness
(F=21.15, p0.01) , indicating that the main effect of eWOM quantity and eWOM timeliness
is signifcant at the 0.01 level, and the interaction effect of eWOM quantity and eWOM
timeliness on consumer trust is insignifcant (F=0.208, p=0.6490.05). Therefore, H1 and H2
are approved.
As expected, the results shows that when the two stimuli are highly related, participants
evaluations of trust is signifcantly different between groups (as shown in fgure 3).The means
of fashion product (A1) and functional products (F1) to consumer trust are 0.401 and 0.891
respectively, t=-3.034, p<0.05, implying that in the conditions of large quantity and high
timeliness, product type has signifcant moderating effect on consumer trust. In the test of A2
and F2, t=-2.637, p0.05, indicating that the means of product type to consumer trust are
signifcantly different at the 0.05 level in the condition of small quantity and high timeliness. In
the test of A3 and F3, t=-2.442, p0.05, indicating that the means of product type to consumer
trust are signifcantly different at the 0.05 level in the condition of large quantity and low
timeliness. In the test of A4 and F4, t= -0.378, p0.05, implying that the means of product
type to consumer trust are insignifcantly different at the 0.05 level in the condition of small
quantity and low timeliness. These statistics demonstrate that consumer trust is low when
eWOM information is of small quantity and low timeliness, no matter what kind of product
consumer is going to buy online.
46
Figure 2: The infuence of eight experimental contexts on consumers trust
Purchase Intention test
We adopted regression analysis to test H5. Based on regression analysis of eWOM information
quantity, consumer trust and purchase intention, we prove that the infuence of eWOM
information quantity on purchase intention is realized through the mediator---consumer trust.
Consumer trust displays signifcant infuence on purchase intention. Before the addition of the
mediator---consumer trust, the infuence of eWOM information quantity on purchase intention
was signifcant (=0.375, p<0.001, R
2
=0.138). After the introduction of consumer trust, the
infuence of eWOM information quantity on purchase intention is insignifcant, while consumer
trust brings signifcant infuence over purchase intention (=0.863, p<0.001, R
2
=0.705).
Furthermore, the models ftting degree has been improved (0.705>0.138), demonstrating that
consumer trust is of good explanation of purchase intention, and consumer trust is a strong
mediator between eWOM information quantity and purchase intention. On the other hand,
the regression analysis among eWOM information timeliness, consumer trust, and purchase
intention also proves that the infuence of eWOM information timeliness on purchase intention is
realized through the mediator---consumer trust. Consumer trust displayed signifcant infuence
to purchase intention. Before the addition of the mediator---consumer trust, the infuence
of eWOM information timeliness on purchase intention is signifcant (=0.272, p<0.001,
R
2
=0.071). After the introduction of consumer trust, the infuence of eWOM information
timeliness on purchase intention is insignifcant, because the consumer trust brings signifcant
infuence over purchase intention (=0.822, p<0.001, R
2
=0.710). Furthermore, the models
ftting degree has also been improved (0.710>0.071), implying that consumer trust is of good
explanation of purchase intention, and consumer trust is a strong mediator between eWOM
information timeliness and purchase intention. Therefore, H5 is accepted.
47
Discussion and Conclusion
The results of experiment confrm our expectation that the impacts of eWOM information
quantity and timeliness on customer trust and purchase intention are stronger when buying
fashion product. Thus, when participants read the online evaluation messages, they could be
affected by their quantity and timeliness. That is to say, the larger the quantity and the higher
the timeliness, the greater the extent of consumer trust and purchase intention. Meanwhile,
when the consumers make buying decision about fashion product, the infuence of eWOM
information quantity and timeliness on consumer trust is more signifcant than that of functional
product. The results of experiment have supported our hypotheses.
The experiment in this research proved that under C2C environment, eWOM quantity and
timeliness have signifcant impact on consumer purchase intention. We have testifed the fve
hypotheses and come to conclusions as follow.
Firstly, the larger the quantity of eWOM information, the greater the extent of consumer trust.
In online environment, consumers infuence each other. Therefore, the infuence on purchase
intention would be stronger when a lot of consumers held the same opinion. The conformity
effect and the effect of sheep fock have proved this point. In C2C environment, eWOM
information quantity has signifcant positive infuence on consumer trust and consumer trust
is signifcantly positively related to purchase intention. That is to say, the larger the quantity
of eWOM information, the greater the extent of consumer trust, and the stronger the consumer
purchase intention.
Secondly, the higher the timeliness of eWOM information, the greater the extent of consumer
trust. Internet is the main platform to publish information. In the complex network era, C2C frms
ought to manage up-to-date messages and delete out-of-date messages. In C2C environment,
eWOM timeliness is signifcantly positively related to consumer trust and consumer trust is
signifcantly positively related to purchase intention. That is to say, the higher the eWOM
timeliness, the greater the extent of consumer trust, and the stronger the purchase intention.
This research also fnds that the infuence of eWOM quantity on consumer trust is bigger than
that of eWOM timeliness. When browsing online evaluation messages, consumers frstly focus
on quantity and then move to timeliness.
Furthermore, because of the difference in product types, the infuences of eWOM quantity and
timeliness on consumer trust also differ. When buying different products, consumers focuses
differ from each other because they tend to focus on function or timeliness in different contexts.
For example, in buying a classical textbook, online evaluation message is not that important
because of low perceived risk. In contrast, online evaluation message plays an important role in
buying fashionable cloth because of the uncertainties in design, material, size, and color of the
cloth. The experiment results also indicates that infuences of eWOM quantity and timeliness
on consumer trust and purchase intention in buying fashion product are stronger than these of
functional product.
The research conclusion demonstrates that in order to satisfy the consumers individual
needs and boost frms performance, business frms can strengthen online evaluation message
management in the following perspectives: (1) adopt point-based system among consumers
who are actively involved in online evaluation activity. The exchange between points and
coupons will motivate customers to play a more active part in online evaluation activities,
48
so that eWOM information quantity and timeliness could be improved. (2) set up specifc
online evaluation message management department. Find someone who will be responsible for
managing online evaluation message and dealing with customer complaints and suggestions in
time, so that customer satisfaction and retention rate could be promoted.

Contributions and Limitations
Based on the former researches, this paper contributes as follow: (1) based on consumers
cognitiveaffectivebehavior hierarchy theory of reaction, this paper built the relational
model of eWOM information consumer trust purchase intention to enrich eWOM
information theoretical model; (2) researches in other countries divided product type into
two classifcations: the searching product and the experiencing product. And found that the
infuence of eWOM information on consumer purchase behavior differed because of the
difference in product type. While in this research, product type was divided into fashion
product and functional product due to cultural difference. Furthermore, product type was
introduced as moderator variable to analyze the moderating effect of eWOM information on
online purchase behavior; (3) this research adopted two dimensions of eWOM information,
quantity, and timeliness to analyze their infuences on consumer online purchase behavior,
which contributed to the related research about the infuence of timeliness on consumer online
purchasing behaviors.
On the other hand, we concluded the limitations of this research as follows: (1) Focusing
on a group of people with abundant online shopping experience, this research didnt confrm
the applicability of this model to people without online shopping experience. (2) eWOM
information involved in this research were positive messages. However, we didnt prove the
infuence on consumer trust and purchase intention when there was a proportion of negative
online evaluation message (for example, when negative messages account for 20%, 50% or
80% of the total).
Future research directions
This research only adopted two dimensions of eWOM information---quantity and timeliness-
--to analyze their infuences on consumer trust and purchase intentions which are based on
difference in product type. However, with the development of e-commerce, online evaluation
message is becoming complex and diverse, and is calling for further discussion and research.
The directions for future research are as follows:

(1) This paper only focuses on analysis of frst-time online evaluation message. Some
web sites allow second-time evaluation, namely, the subsidiary comment. Therefore
the infuence of this kind of online evaluation message also calls for further research.
(2) Integrate purchase is becoming popular among online shoppers. The infuence of eWOM
information on integrate purchase intention needs further discussion, too. Although the
operations of various integrate purchase websites seem to be similar to each other,
their sales volumes differ signifcantly. The number of people buying through integrate
purchase method could reach 10 or 1000, and what are the factors resulting in such a
big difference? In order to solve the problem, we hope that additional research could
be conducted to explore the infuencing mechanism of online evaluation message on
49
consumers, and put forward suggestions for business frms for products sold through
integrate purchase method, so that more customers will be attracted and sales volumes
will be promoted.
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Asian Journal of Business Research Volume 1 Number 2 2011
Determinants of Internet Buying Behavior in India
Ruchi Nayyar
IILM Institute of Management Education
S. L Gupta
Birla Institute of Technology (Deemed Univ.)
Abstract
Internet penetration in India has become more widespread on account of easy payment
options, reduced hardware prices, faster and cost effective internet communication, and
reliable technology. Internet applications such as emailing, e-banking, e-gaming, travel and
entertainment bookings have become part and parcel of the growing tech-savvy population in
India. Although new business models focusing on e-retailing are providing exciting services
to satisfy e-consumers demands, the Indian internet retail market is far behind its expected
potential. It therefore becomes imperative to assess the important determinants of internet
buying behavior. There has been a very limited research to study the internet shopping behavior
and factors responsible for determining online purchase intentions in India. The aim of this
research is to provide a view of the various demographic and psychographic factors infuencing
consumers willingness to purchase online. A new model based on Technology Acceptance
Model (TAM) has been developed for the purpose of this research which incorporates
consumer demographic factors and Perceived risk along with other TAM variables to explain
the consumer acceptance of online shopping. The fndings are expected to hold value for
internet retailers as these are the simplest segmenting descriptors which will guide them in
generating more effective business strategies for their organizations. Overall, this study seeks
to provide productive insights into the factors determining the prospects of internet retailing in
the country.
Keywords: Internet retailing, Technology Adaptation Model, B2C Ecommerce, demography,
Perceived risk
Introduction
Internet has made a signifcant contribution to our lifestyles on account of its abundance and
diversity of information. Its penetration is rising markedly in India which has fuelled the
growth of e-commerce in the economy. The term e-commerce or electronic commerce refers
to shopping on the web. It incorporates a lot of other activities such as B2B transactions,
and various internal processes that companies use to support their buying, selling, hiring and
planning. In terms of magnitude, e-commerce market has grown from 8147 crores in 2007 to
31598 crores by the end of year 2010 (IAMAI, 2011). Broadband connectivity and increased
usage of credit cards have provided a favorable infrastructure for the growth of online shopping
54
in India. Continued liberalization in the telecom sector has shown positive effects in the past
few years. The Indian Telecom policy recognized the convergence of different media and
permitted direct inter-connectivity amongst various service providers. This has paved the way
to internet retailing which has become one of the most innovative and challenging contributions
to the retail industry. It offers consumers an additional channel for information, service and
purchasing along with additional benefts of choice, convenience and cost savings. Global
online retailing has gained a signifcant share in overall retail sales over the past two decades.
B2C E-commerce has become a lucrative platform for e-marketers to attract potential e-buyers
in India. On account of its diversity in culture, language and heritage, India can offer a favorable
platform for innovative e-commerce based technologies. However, in comparison to wider
acceptance of B2C retail in developed economies, internet retailing is still in its nascent stages
in India. Indian consumers do not seem to be overly enthusiastic about online purchasing.
Delayed shipping, non favorable return policies and complicated cancellation processes seem
to be some of the key factors that abstain potential customers to shop online. Owing to their age,
gender, education, occupation and cultural instincts, the consumer buying behavior in India is
still traditional. Indians prefer to have a feel of the product and spend time in buying. Lack of
physical touch and inspection, security and privacy concerns are plaguing the growth of this
market. Customers rely on purchasing familiar brands in order to reduce the risks associated
with their purchase. Privacy concerns have dampened the online consumer enthusiasm in India.
There are a number of issues related to security and transaction frauds. High occurrences of
failed payments deter the customer to revisit portals for shopping. With regard to the future
of etailing in India, the views are divergent. Many experts believe that the future of internet
business is very promising and expect its exponential growth in the coming times. Overall,
Indian etail business is a rich business waiting to be exploited! It has become imperative for
online retailers to understand the attitudes and preferences of the internet consumers and devise
appropriate business strategies to gain competitive advantage. This study aims at improving the
understanding of online consumer behavior by investigating various factors affecting intention
to purchase online.
Literature Review
The Technology Adoption Model (TAM), on account of its robustness, parsimony and
explanatory powers, is believed to be the most effective model for understanding the adoption
of technology. (Davis, Bagozzi, and Warshaw, 1989; Venkatesh and Davis, 2000; Venkatesh et
al., 2003). TAM has been exceedingly successful in explaining technology adoption behavior
and has been utilized by many researchers to understand consumers online purchase behavior
as well. However, investigations to understand the Indian consumer online behavior are still
minimal. Therefore, this study aims to develop and test a modifed TAM that is appropriate for
the Indian context.
Technology Acceptance Model: A Theoretical Basis
TAM provides an explanation of the determinants of computer acceptance that is general,
capable of explaining user behavior across a broad range of end-user computing technologies
and user populations (Davis et. al., 1989). TAM is based on the Theory of Reasoned Action
(Fishbein and Ajzen, 1975) which suggests that attitude and intention drive an individuals
55
social behavior. This means that within available time and context, individuals behavior
vary with respect to their intentions. TAM posits that the two primary antecedent variables
determining attitude to adopt an information system include perceived usefulness and perceived
ease of use. TAM specifes the causal relationships between system design features, perceived
usefulness, perceived ease of use, attitude toward using, and actual usage behavior. In general,
TAM provides an informative depiction of the mechanisms by which design choices infuence
user acceptance. It therefore helps in forecasting and evaluating user acceptance of technology
related products and services. A number of researchers have used the constructs of perceived
usefulness, perceived ease-of-use, and subjective norm to explain technology usage/acceptance
for a variety of information systems such as online purchasing. The following TAM model
depicts the conceptual model of this study.
Figure 1: Technology Acceptance Model (TAM)
Perceived usefulness refers to the degree to which a person believes that using the new
technology will improve his or her performance or productivity (Davis, Bagozzi and Warshaw,
1989 and 1985).
Perceived ease of use on the other hand, indicates how the users perceive the ease of using the
technology. It is defned as the degree to which a person believes that using a particular system
would be free from effort (Davis, Bagozzi and Warshaw, 1989).
Behavioral Intention is defned as the degree to which a person has formulated conscious
plans to perform or not perform some specifc future behavior (Davis and Warshaw, 1985). It
forms a strong predictor of actual system use. TAM posits that Behavioral Intention is a strong
determinant of system use and is determined by Perceived Usefulness and Perceived Ease of
Use. Based on TAM, following hypotheses have been formulated.
56
H1: Perceived usefulness is related to Behavioral Intention in an online shopping environment.
H2: Perceived ease of use is related to Behavioral Intention in an online shopping environment.
TAM also posits that perceived ease of use and perceived usefulness are closely linked. If
applied to the context of internet shopping, if an internet user perceives internet purchase as
hassle free, he/she will develop a tendency to perceive it as useful. Thus,
H3: Perceived ease of use is related to Perceived Usefulness in an online shopping environment.
Online Shopping Orientation
One of the setbacks of TAM is that it treats online purchasing at the outset of the technology. On
account of its emphasis only on the cognitive determinants of IT use intention; TAM cannot be
applied to the adoption of internet technology for purchase purpose. This research argues that
Perceived risk and demography are critical factors forming the potential e-shoppers intention
on the shopping orientation of an e-shopper.
Perceived risk is defned as a functional or psychosocial risk a consumer feels he or she is
taking when purchasing a product. Bauer (1960) has defned perceived risk as a combination of
uncertainty plus seriousness of outcome involved. Peter & Ryan (1976) have defned perceived
risk as the expectation of losses associated with purchase and acts as an inhibitor to purchase
behavior. Its observed that the perceived risk in e-commerce is greater than that of commerce
at brick-and-mortar retail stores. Credit card security, lack of touch and feel, concerns related to
return the item, and transaction security have prevented consumers against purchasing online
(Bellman et al, 1999). Thus, the likelihood of purchasing on the Internet decreases with increase
in consumers perceptions of risk. Perceived risk is extremely important to understand the online
shopping behavior because it impacts other consumer perceptions including perceived ease of
use and perceived usefulness (Lee et al., 2001). In an ecommerce environment, the combination
of uncertainty (likelihood of loss) and danger (cost of the loss) which form the two components
of the perceived risk have a negative infuence on perceived ease of use and adoption (Chen
et al, 2006).Therefore higher the perceived risk, the lower the perceived value of the system
. Many previous researches have pointed out that ease of use reduces the uncertainty and risk
of system use (Fetherman and Pavlou, 2003). This indicates that if a consumer perceives that
internet services are easy to use then he would also perceive that other services related to the
internet will perform well and he would be more willing to adopt them. Thus,
H4: Perceived ease of use of Internet purchase has a negative infuence on internet shoppers
Perceived purchase risk.
Individual Differences
Demography (age, gender, profession, education etc) affect how technology is used (Zmud,
1989; Assael, 1981). Hence, its important to study the impact of demographic variables on
online shopping. The socio-economic status of early adopters is higher than late adopters
(Rogers, 1995). Men and women also differ in their attitudes toward e-shopping. Traditional
Indian women regard shopping as a social release. In most of the families, women are the
chief decision makers (Dholakia, 1999). Men are more motivated toward utilitarian benefts of
products and give lesser importance to social relations and personal contacts (Steenkamp et al.,
57
1999). Many women perceive shopping as an entertainment channel to socialize and interact
with other consumers. Hence, they get more satisfed purchasing from brick establishments
rather than from online stores. Men lay more emphasis on hassle free purchases in the comfort
of their homes or workplaces and mind less on the hedonistic benefts of store shopping. Hence
their overall positive attitude towards internet shopping is higher compared to the fairer sex
(Teo, 2001). Unlike women, men are less motivated by inspirational and stimulating effects of
brick and mortar purchases. Thus,
H5: Gender affects intention to purchase online.
Needs, interests and resources vary with age. In contrast to a tech-savvy younger generation,
the older generation is more satisfed with conventional shopping methods (May and Greyser,
1989). There is less time constraint for the older community, thus tend to socialize more through
traditional shopping medium. Younger generation has always exhibited a positive disposition
towards adoption of a new innovation (Schiffman and Kanuk, 2003). Younger people are more
ready to embrace innovative technology compared to the older group. The early adopters of
internet technology are typically younger in age primarily on account of its utilitarian and
hedonistic benefts (Bordeaux et al., 2002).It is also found that the younger generation is less
concerned about the security and reliability aspects of internet technology ( Fogg et al., 2000).
Computers intimidate many elderly (Eastman and Iyer, 2004) leading to reduced internet
activities amongst older population. Thus,
H6: Age affects intentions to purchase online.
Educated and higher income group patronize internet retailing more than lower educated and
lesser income group (Cunningham and Cunningham, 1973). Educated people make good
innovators and early adopters of new technology (Teo, 2001; Zhao et al., 2002; Dillon and
Reif, 2004). Less educated people tend to exhibit a higher degree of computer anxiety towards
computer technology (Parasuram and Igbaria, 1989). Hence, their negativity towards electronic
retailing as a direct form of retailing is inevitable. Thus,
H7: Education affects intention to purchase online.
A large income encourages people to conduct more internet shopping (Fogg et al., 2001).
People at higher positions in their organizations embrace new and innovative technology
faster compared to those at lower positions in their organizations. Higher the educational level,
income, and occupation, higher would be the perception of internet retailing (Cunningham and
Cunningham, 1973; Reynolds, 1974; Wotruba and Pribova, 1995). Many earlier researches
have revealed that most of the internet shoppers are men, earning high incomes and owning a
university education (Dholakia and Usitalo, 2002; Li et al., 1999; Vrechopoulos et al., 2001).
Thus,
H8: Income affects intention to purchase online.
H9: Position in the organization affects intention to purchase online.
Research Framework
58
The following fgure illustrates the modifed TAM developed for this study to understand
the determinants of internet buying behavior in the Indian context. As mentioned above, the
attitude construct is removed from this research model while perceived risk and demography
have been included.
Figure 2: Research Model
DEMOGRAPHY

PERCEIVED

USEFULNESS

PERCEIVED

EASE OF USE

PERCEIVED RISK



INTERNET RETAILING
INTENTION

H1

H2

H3
H4
H5, H6, H7, H8, H9
Research Methodology
This study involves non-probabilistic convenience sampling. 500 customers were selected
throughout the urban and semi urbanized locations of India. Questionnaires were distributed
both manually and electronically through web. Quantitative data was collected from a self-
administered questionnaire. Utmost care was undertaken to ensure that there is insignifcant
sampling error and the results of the sample study can be applied, in general, for the universe
with a reasonable level of confdence. The study used a variety of questions to fnd out complete
information about the topic under research. Apart from dichotomous and multiple-choice
questions, the questionnaire also included statements which the respondents were required
to rate on the basis of different scales like the Likert scale and rating scale. The research
instrument constituted a 5-section questionnaire that was modifed from various resources
in order to gather information related to demographics, perceived usefulness, perceived ease
of use, perceived risk and behavioral intention to purchase online. Samples of measures and
variables are shown below:
59
Table I: Questionnaire preparation
Section Sample Questions Source
Perceived
Usefulness
I like internet shopping as it offers me round the
clock shopping
I like browsing online to preview products before
purchasing
Adapted based on
Davis (1989)
Perceived Ease of
Use
I feel internet shopping is a fun flled experience
I feel better quality products are offered on the
internet
I feel better quality products are offered on the
internet
Adapted based on
Davis (1989)
Perceived Risk I fnd public knowledge of my purchases risky
I feel internet retailers are not trustworthy
Baur (1960), Bellman
et al. (1989), Chen et
al. (2006)
B e h a v i o r a l
Intention
I feel shopping in the local markets is too time
consuming and problematic
I fnd internet shopping quite easy
Adapted based on
Ajzen and Fishbein
(1980), Davis and
Warshaw (1985)
Pre-testing of the research instrument was carried out on a sample of 40 Management students
from a reputed Indian Management Institute. Descriptive and frequency testing was employed
on the quantitative data. Moreover, Factor analysis technique was deployed for identifying the
structure of a set of variables and for data reduction (Hair et al., 1998).
Data Analysis and Results
Most of the respondents are males (66%). The highest percentage of the respondents is salaried
(65.9%), with 48.9% falling in the salary bracket of Rs. 2 to 4 lakhs per annum. The given
sample comprises of internet users aged 15 and more. A larger percentage of the sample (79%)
belongs to the age group of 22-29 years. While the least representative group of respondents is
of age group of 40-49 years and above, there is no respondent aged 60 or above. This could be on
account of lack of use and familiarity of computer technology. Finally 73% are postgraduates
and 42% are graduates. Respondents were asked to pick up their recent online purchase. 74%
have utilized internet to book tickets. Travel related purchases have totally dominated web
shopping in the country. 55% respondents believe convenience as the reason infuencing online
purchase. Besides, privacy and security related issues are the chief stumbling blocks while
making internet purchases.
R-type factor analysis is deployed to understand the structure of the psychographic variables.
Metric variables chosen for the purpose of this research constituting a homogenous set of
perceptions are found to be most suitable for conducting factor analysis. The output of factor
analysis indicates that the frst three components are explaining 66.2% of the total variance.
Reliability of the multi-item scale for each dimension was measured using Cronbach alphas.
The measure of reliability for 20 number items on a sample size of 500 was observed to be
0.5986 which is above the recommended minimum standard of social science based researches.
The italicised variables are related negatively to the dependent variable. Hence, these variables
60
can be clubbed into group Perceived risk. Although, Factor Analysis does not generate a new
factor for Perceived risk, the values support H4; Perceived ease of use of Internet purchase has
a negative infuence on internet shoppers perceived Purchase risk.
Table II: Results of Factor Analysis
Factor Loading Reliability
Factor 1: Perceived Usefulness 0.63
I like internet shopping as it offers me round the clock
shopping 0.61
I like browsing online to preview products before purchasing 0.59
I think internet shopping offers better choices than local
store 0.45
I think browsing on the internet saves a lot of my window
shopping time 0.78
Factor 2 : Perceived Ease of Use 0.75
I fnd internet shopping is a new experience 0.43
I fnd internet shopping is a fun flled experience 0.58
I feel better quality products are offered on the internet 0.53
I get scared by identity thefts through credit cards while
purchasing online -0.84
I fnd public knowledge of my purchases risky -0.72
I feel easy accessibility on computers threatens my credit
card details -0.86
I feel scared to buy things on internet -0.8
I feel internet retailers are not trustworthy -0.76
I like home delivery of products on online purchase 0.88
I like online shopping to avoid problems at local shopping
centers 0.82
I prefer online shopping to avoid driving and parking
hassles. 0.83
I like shopping online in the comfort of my home and
surroundings 0.85
I like discounts and incentives schemes on the internet 0.83
Factor 3: Behavioral Intention 0.47
I feel shopping in the local market is too time consuming
and problematic -0.41
I fnd internet shopping quite easy -0.38
I like going through product reviews and recommendations
by other browsers
0.58
61
DEMOGRAPHY

PERCEIVED
USEFULNESS
(PU)
PERCEIVED
EASE
OF USE (PEU)
INTERNET
RETAILING
INTENTION (BI)
R
2
=0.32
R
2
=0.31
R
2
=0.44
Regression Analysis
The concern of our model is whether the variables have an infuence as hypothesized. To serve
this purpose, three multiple regression analysis (MRS) were conducted. The frst is used to
analyze the relationship between PU and BI, the second between PEU and PU and the third
between PEU and PU.
Figure 3: Revised Model
R2 values indicate presence of a strong relationship between PU and PEU. Therefore, H3 is
supported. Between PU and BI, the relationship as indicated by the regression coeffcients
does not seem to be good. However, it appears that the hypothesis H2 is pointing in the right
direction. Similarly, although the relationship between PEU and BI does not seem to be strong,
but since the hypothesis is pointing in the right direction, H1 is accepted.
Impact of Demography on Behavioral Intention
In order to study the impact of demography on Behavioral Intention, the interval data constituting
BI was frst modifed into nominal data incorporating only 2 options intended to shop online
and not intended to shop online. Thereafter, Chi- square test was used to identify whether given
two discrete variables are in a relationship or are independent. Results indicate that gender
(
2
=29.642, p=0.000), age (
2
=18.387, p= 0.000), income (
2
=34.491, p=0.000) and position
in the organization (
2
= 53.11, p=0.000) affect intention to purchase online positively, whereas
education (
2
=4.626, p=0.099) is found to have no impact on internet purchase intention.
62
Table III: Summary of results
Hypothesis Accepted/
Rejected
H1 Accepted
H2 Accepted
H3 Rejected
H4 Accepted
H5 Accepted
H6 Accepted
H7 Rejected
H8 Accepted
H9 Accepted
Conclusions
The results have displayed signifcant relationships between research variables. Perceived ease
of use has a negative infuence on perceived risk. Perceived ease of use is positively associated
to perceived usefulness. The outcome of this research suggests that perceived ease of use and
perceived usefulness are antecedents of intention to purchase online. However, results do not
indicate a strong relationship between PEU-BI and PU-BI. This clearly shows that Indians are
somewhat reluctant to transacting online. Indians look at shopping as an entertainment activity
and consider visiting malls and brick and mortar outlets as an escape from their day-to-day
routine. Other factors holding them back from online shopping include fear of identity and
fnancial theft, product genuineness, lack of touch and feel, delivery time and fxed price format.
Its imperative for online vendors to understand the factors that may infuence the formation
of consumers behavioral intention toward online shopping. Increasing online brand presence
may prove to be an effective solution. Most of the leading brands are either not present online
or are present in a very non-friendly manner. Internet retailers can also increase their clientele
by providing signifcant discounts across products. Attractive discounts by brands can act as
a magnet in motivating consumers to buy online. Extensive market researches could enable
online vendors to identify preferences of their major customer groups and adjust their website
contexts accordingly. Latest technology can enable creation of attractive catalogues for offers
and promotions. Easy going navigational features amalgamated with multiple payment options
and running innovative customer reach programs could act as mascots for online retailers.
Frequently personalized information and exclusively personalized website could diminish
perceived risk to a large extent.
The fndings of this study have revealed a higher number of male internet shoppers than females.
The results are in consistence with the literature review. Men adopt computer technology much
faster than females. In comparison to females, males are more prone to participate in internet
activities predominantly emailing, information search or downloading and purchasing activities.
Females exhibit a higher degree of computer nervousness and technostress than males. Age
has also been found to have an infuence on internet retailing adoption. Internet usage has not
diffused uniformly amongst all age groups, hence the difference in attitude towards online
63
purchase. Surprisingly, education has not shown any signifcant association to internet retailing.
It should be noted, however, in the present study that respondents are suffciently educated,
falling in the category of graduates and above. They constitute the PC literate population with
higher exposure and awareness of internet. Another plausible justifcation could be that internet;
with its high degree of user friendliness makes differences in educational levels insignifcant.
Although, this population makes versatile use of various online applications such as emailing,
messaging, online gaming, information research etc., but not internet retailing. This clearly
indicates that online retailing is not the most appealing and convenient means of shopping
amongst internet users in India. Annual household income affects internet retailing adoption.
Higher income motivates more purchasing. Similar justifcation holds good for the positive
association obtained between position in the organization and internet retailing adoption. Higher
position in an organization indicates more awareness of modern technology and opportunities
that increases higher online retailing prospects.
Limitations of the research and Suggestions for future research
Despite meeting the objective of the present research, a few limitations were identifed in
the course of this study. This research investigates the impact on internet retailing by various
factors in Indian retail industry. Thus, the outcomes of this research are best suited to Indian
e-commerce retail industry. These fndings cannot be replicated to other nations owing to
differences in terms of economy, culture and technology.
Though the sample size selected for this research is acceptable, a bigger sample size could have
assessed behavioral and attitudinal perceptions in greater depth. Besides all respondents were
internet savvy and suffciently educated. Future research might examine the diverse internet
users such as older, less internet savvy and less educated. Finally, this research is only confned
to online shopping in India. Further research can be expanded to other shopping channels
including phone shopping, catalog shopping or TV shopping.
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66
Asian Journal of Business Research Volume 1 Number 2 2011
Online Shopper Behavior: Infuences of Online Shopping
Decision
Chayapa Katawetawaraks
SCG Trading Services Co. Ltd
Cheng Lu Wang
University of New Haven
Abstract
Recent research has shown an interest in investigating consumer motivations that affect the
online shopping behavior. It is yet to understand what factors infuence online shopping decision
process. The objective of this study is to provide an overview of online shopping decision
process by comparing the offine and online decision making and identifying the factors that
motivate online customers to decide or not to decide to buy online. It is found that marketing
communication process differs between offine and online consumer decision. Managerial
implications are developed for online stores to improve their website.
Keywords: Online shopping, online shopper behavior, online shopping decision
Introduction
The internet has played a signifcant role in our daily life in that people can talk through the
internet to one who is actually on the other side of the Earth, can send email around the clock,
can search information, can play game with others, and even can buy things online. Meanwhile,
Internet shopping has been widely accepted as a way of purchasing products and services It
has become a more popular means in the Internet world ((Bourlakis et al., 2008)). It also
provides consumer more information and choices to compare product and price, more choice,
convenience, easier to fnd anything online ((Butler and Peppard, 1998)). Online shopping
has been shown to provide more satisfaction to modern consumers seeking convenience and
speed ((Yu and Wu, 2007)). On the other hand, some consumers still feel uncomfortable to
buy online. Lack of trust, for instance, seems to be the major reason that impedes consumers
to buy online. Also, consumers may have a need to exam and feel the products and to meet
friends and get some more comments about the products before purchasing. Such factors may
have negative infuence on consumer decision to shop online.
This study frst provides a theoretical and conceptual background that illustrates the differences
between offine and online consumer behavior process. Then we identify some basic factors
that drive consumers to decide to buy or not to buy through online channel. Finally, we draw
managerial implications of how online sellers can use this knowledge to improve their online
stores to be more attractive and get more online shoppers.
67
Theoretical Background
Offine and Online Consumer Decision-making Process
The process of making decision are very similar whether the consumer is offine or online.
But one some major differences are shopping environment and marketing communication.
According to traditional consumer decision model, Consumer purchase decision typically starts
with need awareness, then information search, alternative evaluations, deciding to purchase
and fnally, post-purchasing behavior.
In terms of online communication, when customers see banner ads or online promotion, these
advertisements may attract customers attention and stimulate their interesting particular
products. Before they decide to purchase, they will need additional information to help them
out. If they do not have enough information, they will search through online channels, e.g.,
online catalogs, websites, or search engines ((Laudon and Traver, 2009)). When customers
have enough information, they will need to compare those choices of products or services. In
the search stage, they might look for the product reviews or customer comments. They will
fnd out which brand or company offers them the best ft to their expectation. During this stage,
well-organized web site structure and the attractive design are important things to persuade
consumers to be interested in buying product and service ((Koo et al., 2008)). Moreover, the
information sources nature may infuence buyer behavior ((Bign-Alcaiz et al., 2008)). The
most useful characteristic of internet is that it supports the pre-purchase stage ((Maignan and
Lukas, 1997)) as it helps customers compare different options ((Dickson, 2000)). During the
purchasing stage, product assortment, sale services and information quality seem to be the most
important point to help consumers decide what product they should select, or what seller they
should buy from ((Koo et al., 2008)). Post-purchase behavior will become more important after
their online purchase. Consumers sometimes have a problem or concern about the product,
or they might want to change or return the product that they have bought. Thus, return and
exchange services become more important at this stage (Liang and Lai, 2002).
All fve stages described above are affected by external factors of risks and trusts (Comegys
et al., 2009). The search process is a signifcant component of customers online shopping
behavior (Seock and Norton, 2007). The source risk comes in the stage of information search
and evaluation because the information in the web sites might contain some mistakes. Some
websites require customers to register before searching their website. As such, in addition to
product risk, consumers also face the risk of information security (Comegys et al., 2009; Wang
et al., 2005). Because of the nature of online purchasing, customers take the risk as they are not
able to examine the product before purchasing. They also take the risk in the payment process
because they may need to provide personal information including their credit card number.
Security problem does not stop at the purchase stage but continues to the post-purchase stage
because their personal information might be misused.
A Framework of Online Consumer Decision
A framework that compares online consumer decision with offine decision making was
developed by Laudon and Traver (2009), who suggest that a general consumer behavior
framework requires some modifcation to take into account new factors.
When consumers want to buy product, they will look at the brand and the characteristics of
68
product or service. Some products can be purchased and shipped easily online such as, software,
books. On the other hand, some products are hard to decide through online channel. Web
site features, frm capabilities, marketing communication stimuli, and consumer skills are also
important, in terms of the proposed framework (Laudon and Traver, 2009). When consumers
want to buy product, they will look at the brand and the characteristics of product or service.
Some products can be purchased and shipped easily online such as, software, books. On the
other hand, some products are hard to decide through online channel. Web Site feature is one of
the important things that can infuence consumers to buy product online. For example, online
retailers can use high technology to improve their websites in order to infuence consumer
perceptions of the web environment (Prasad and Aryasri, 2009). If the web site is too slow, not
navigability, or not safe enough, will have negatively impact consumer willingness to try or
buy products from the website. Consumer experience with online shopping (Broekhuizen and
Huizingh, 2009) or consumer skills, which refer to the knowledge that consumers have about
product, and how online shopping works (Laudon and Traver, 2009) also infuences online
shopping behaviors. Clickstream behavior is another aspect that becomes more important in the
online world. It refers to the behavior that consumers search for information through web sites
many sites in the same time, then to a single site, then to a single page, and fnally to a decision
to purchase (Laudon and Traver, 2009). All these factors lead to specifc attitudes and behaviors
about online purchasing and a sense that they can control their purchasing environment thru
the online world.
Infuences of Online Shopping Decision
Motivations that lead consumer to buy online
There are many reasons why people shop online. For examples, consumers can buy anything
at anytime without going to the store; they can fnd the same product at a lower price by
comparing different websites at the same time; they sometime want to avoid pressure when
having a face-to-face interaction with salespeople; they can avoid in store traffc jam, etc.
These factors can be summarized into four categoriesconvenience, information, available
products and services, and cost and time effciency.
Convenience: Empirical research shows that convenient of the internet is one of the impacts
on consumers willingness to buy online (Wang et al., 2005). Online shopping is available for
customers around the clock comparing to traditional store as it is open 24 hours a day, 7 days a
week (Hofacker, 2001; Wang et al., 2005). Research shows that 58 percent chose to shop online
because they could shop after-hours, when the traditional stores are closed and 61 percent of
the respondents selected to shop online because they want to avoid crowds and wailing lines,
especially in holiday shopping (The Tech Faq, 2008). . Consumers not only look for products,
but also for online services. Some companies have online customer services available 24 hours.
Therefore, even after business hours, customers can ask questions, get necessary support or
assistance, which has provided convenience to consumers (Hermes, 2000).
Some customers use online channels just to escape from face-to-face interaction with salesperson
because they pressure or uncomfortable when dealing with salespeople and do not want to be
manipulated and controlled in the marketplace (Goldsmith and Flynn, 2005; Parks, 2008).
This is especially true for those customers who may have had negative experience with the
salesperson, or they just want to be free and make decision by themselves without salespersons
presence.
69
Information: The internet has made the data accessing easier (Wang et al., 2005). Given
customers rarely have a chance to touch and feel product and service online before they
make decision, online sellers normally provide more product information that customers can
use when making a purchase (Lim and Dubinsky, 2004). Customers put the weight on the
information that meets their information needs (Keencys, 1999). In addition to get information
from its website, consumers can also beneft from products reviews by other customers. They
can read those reviews before they make a decision.
Available products and services: E-commerce has made a transaction easier than it was and
online stores offer consumers benefts by providing more variety of products and services that
they can choose from (Lim and Dubinsky, 2004; Prasad and Aryasri, 2009). Consumers can
fnd all kinds of products which might be available only online from all over the world. Most
companies have their own websites to offer products or services online, no matter whether
they already have their front store or not. . Many traditional retailers sells certain products
only available online to reduce their retailing costs or to offer customers with more choices
of sizes, colors, or features. Boccia Titanium, for instance, has stores in many states but not
in Connecticut. The company offers website to reach and to fulfll the need of Connecticut
customers to order online. . Similarly, Yves Rocher, a French company, does not have the
front store in the U.S. It offers the website so that U.S. customers can just add products they
want into the online shopping cart and the product will be shipped to their house. Moreover,
online shopping sometimes offer good payment plans (Amin, 2009) and options for customers.
Customers can decide their payment date and amount (Anonymous, 2009) in their own
preference and convenience.
Cost and time effciency: Because online shopping customers are often offered a better deal,
they can get the same product as they buy at store at a lower price (Rox, 2007). Since online
stores offer customers with variety of products and services. it gives customers more chances
to compare price from different websites and fnd the products with lower prices than buying
from local retailing stores (Lim and Dubinsky, 2004). Some websites, Ebay for example, offer
customers auction or best offer option, so they can make a good deal for their product. It
also makes shopping a real game of chance and treasure hunt and makes shopping a fun and
entertainment (Prasad and Aryasri, 2009). Again, since online shopping can be anywhere and
anytime, it make consumers life easier because they do not have to stuck in the traffc, look
for parking spot, wait in checkout lines or be in crowd in store (Childers et al., 2001). As
such, customers often fnd shop from the website that is offering convenience can reduce their
psychological costs (Prasad and Aryasri, 2009).
Factors that Impede Consumers from online Shopping
Major reason that impede consumers from online shopping include unsecured payment, slow
shipping, unwanted product, spam or virus, bothersome emails and technology problem.
Business should be aware of such major problems which lead to dissatisfaction in online
shopping.
Security: Since the payment modes in online shopping are most likely made with credit card, so
customers sometime pay attention to sellers information in order to protect themselves (Lim
and Dubinsky, 2004). Customers tend to buy product and service from the seller who they trust,
or brand that they are familiar with (Chen and He, 2003). Online trust is one of the most critical
70
issues that affect the success or failure of online retailers (Prasad and Aryasri, 2009). Security
seems to be a big concern that prevent customers from shopping online (Laudon and Traver,
2009). because they worried that the online store will cheat them or misuse their personal
information, especially their credit card (Comegys et al., 2009). For instance, report indicated that
70 percent of US web users are seriously worried about their personal information, transaction
security, and misuse of private consumer data (Federal Trade Commission, 2001).
Intangibility of online product: Some products are less likely to be purchased online because
of the intangible nature of the online products. . For example, customers are less likely to buy
clothes through online channel (Goldsmith and Flynn, 2005) because they have no chance
to try or examine actual product (Comegys et al., 2009). Customers viewing a product on
computer screen can show a different effect than actually seeing it in the store (Federal Trade
Commission, 2003). In sum, customers cannot see, hear, feel, touch, smell, or try the product
that they want when using online channel. In many cases, customers prefer to examine the
product frst and then decide whether or not they want to buy (Junhong, 2009). Some people
think the product information provided in website is not enough to make a decision. Online
shoppers will be disappointed if the product information does not meet their expectation (Liu
and Guo, 2008).
Social contact: While some customers likely to be free from salesperson pressure, many online
shopping would feel diffcult to make a choice and thus get frustrated if there is no experienced
salespersons professional assistance (Prasad and Aryasri, 2009). Moreover, some customers
are highly socially connected and rely on other peoples opinions when making purchase
decision tend. There are also consumers who sometimes shop at traditional store because they
want to fulfll their entertainment and social needs which are limited by online stores (Prasad
and Aryasri, 2009).
Dissatisfaction with online shopping: customers past online shopping experience often affect
their future purchase decision. In online shopping, for example, they may get unwanted
product or low quality products, product does match what is described or expected (Comegys
et al., 2009).. The product may be fragile, wrong, or not working. Some online sellers may
not agree to refund those products even though it is not what the customer wanted. Delivery is
another thing that affects online purchasing decision. Slow or late shipping, for instance, makes
customer walk away from online shopping (Comegys et al., 2009).
Implications
Managerial Implications
Online shopping is an important business model in e-commerce (Liu and Guo, 2008). If the
online sellers want to persuade and retain online buyer, they need to know what the issues online
buyers use to decide their online purchase (Lim and Dubinsky, 2004). To better understand
online customer shopping behavior, seller can improve or create the effective marketing
program for their customer (Lim and Dubinsky, 2004). There are couple ways that company or
seller can do or should do to persuade those who do not shop online to become more interested,
and, fnally, to be a potential customer.
After looking at major motivations that lead customers to shop online, online sellers should
keep those issues in mind and try to satisfy customer whenever possible. Also, understanding
71
what make some customers hesitate to shop online, sellers should fnd ways to reduce those
negative aspects in order to gain more customers by building trustable and securer website,
attractive and useful website, offering online service, and offering additional option.
Trustable and Securer website: Consumer willingness to buy and patronize online store are
affected by consumers trust in giving personal information and security for payment through
credit card transactions (Whysall, 2000). They also concern about transaction security and
data safety when purchase online (Constantinides, 2004). Getting approved certifcate from an
organization such as eTrust is one of the ways to make a website more trustable (Korgaonkar
and Karson, 2007). By doing so, a website will be more secure and it will increase customer
confdence and lead to sale increase. For example, Scribendi, English language editing and
proofreading services, bought SSL Certifcate from VeriSignthe most trusted mark on the
internet; by then site visitors who saw the green address bar made the sale leapt by 27%
(Verisign, 2009). When the companies have this certifcate, the address bar of their website
will change to green color and the Web address will begin with https://; so customers know that
the website is secure and trustable (Verisign, 2009).
Another way seller can do to reduce customers risk concern when purchasing online is to
carry brand name product in the website or even have its own brand name such as Amazon
(Korgaonkar and Karson, 2007). Holding and selling brand name product can improve the trust
of the website. Brand name is one of the most important issues which affect customers buying
decision (Lim and Dubinsky, 2004).
It is imperative for online companies to ensure customer that they will never use customers
information to other purposes by clarifying customer privacy policy. This will at least ease
consumer concern about their identify security. Online stores may use integrated mechanism
in order to build the trust in safeguarding consumers personal information and avoidance of
misuse of credit card mode of payments (Prasad and Aryasri, 2009).
User Friendly Website: Customers can be infuenced by the image of the web site when they
decide what website or buyer they should buy from (Lim and Dubinsky, 2004). Not only should
companies create their secured website, but also should create it to be more attractive and more
useful. Online stores can change a shopper into a buyer if the stores provide variety and useful
information of product, good customer service, and easy-to-access website (Laudon and Traver,
2009). Their websites should have enough information but should not be too overwhelming.
Putting unstructured or useless information in the website can reduce internet usefulness and
ease of use (Bign-Alcaiz et al., 2008). Also, companies and sellers should double-check any
single words in their website to reduce mistakes and customers misunderstanding. Information
quality and visual design is important effect on repurchasing (Koo et al., 2008). The willingness
to purchase online will be low if the online store lacks of ease in searching and comparing
shopping, and product updates. Online store should make their website to be easy for consumers
to search product and service. Making web designs and portals novel and sophisticated and
web atmospherics friendly is a key to attract visitors. Moreover, if online stores want to convert
visitor into buyer, they should improve their website by offering customer a comfortable,
logical, interesting and hassle-free process and easy language by creating fast website with
functional design as smooth as possible (Broekhuizen and Huizingh, 2009). Online payment
process is another issue that should be taken care of because it affects the willingness to pay
(Wang et al., 2005). Online stores should make their payment process to be as easy and secure
72
as possible. To sum, if online stores want to increase the customer, they should take care of
their website design to be more user-friendly (Bign-Alcaiz et al., 2008).
Online Service: Customer service is as important as quality of website (Liu and Guo, 2008).
According to Hermes (2000), 72 percent of online consumers revealed that customer service
is a major factor in online shopping satisfaction. If the customer service is not available or
reachable, customers will perceive that companies are trying to hide something or not intending
to solve their problems. Online stores should provide the added-value of service to customers
(Wang et al., 2005) and have customer feedback channel in their website (Yu and Wu, 2007).
There should be interactivity customer service in the website, so that customers can contact
with the seller anywhere and anytime (Lim and Dubinsky, 2004). Software downloading,
e-form inquiry, order status tracking, customer comment, and feedback are some of example
that online sellers can use to fulfll their online service (Lim and Dubinsky, 2004).
Additional option: Because customers are not able to touch or try products before they buy,
online store should offer them some additional options.. For instance, a money-back guarantee
is one of the means to reduce customers concern (Comegys., 2009). Sellers might consider to
offer money-back guarantee policy including shipping expenses refund to reduce purchasing
risk In addition, to avoid shipping delay and product lost, , online store may cooperate with
other companies with expertise in logistic to improve their distribution channels (Yu and Wu,
2007).
Offering customers more fexible prices and promotions or offering a one-stop shopping service
are some more examples that online stores can use to make their business succeed (Yu and Wu,
2007). Online sellers may offer customers to use their bank account number, or stored-value
card to complete their purchase. It is also suggested that online stores may offer customer an
e-wallet which transfers balance from customers online bank account to the store payment
system (Federal Trade Commission, 2003). This may help sellers to gain more sales from those
who want to buy online products or services but do not have credit card or do not want to use
their credit card online.
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Asian Journal of Business Research Volume 1 Number 2 2011
Assessing Customer Satisfaction with Non-Proft
Organizations: Evidence from Higher Education
Lily Huang
City University of Hong Kong
Zhilin Yang
Victoria University of Wellington
Gerald Hampton
New Mexico State University
Abstract
This study empirically examines several key issues concerned with assessing customer
satisfaction in the context of higher education. Data were obtained from 1475 students, with
various characteristics, who were enrolled at four large universities. The results indicate that
dissatisfed and satisfed students are signifcantly different when assessed in terms of fve
education service attributes. The performance model is found to be capable of explaining
customer satisfaction more powerfully than either the disconfrmation or the multi-attribute
model. In addition, some student characteristics are considered to be crucially important in
their effects on expectation and performance of education service attributes, which, in turn,
exert infuence on assessment of customer satisfaction.
Keywords: Customer Satisfaction, Student Satisfaction, Performance Model, High Education
Introduction
For the past three decades, increasing numbers of universities have perceived that students
are important customers, and have utilized marketing thinking and practice to attract, satisfy,
and retain students (Conant, Brown, and Mokwa, 1984; Ferguson, Wisner, and Discenza,
1986; Hampton, 1993; Douglas, McClelland, and John Davies, 2008; Gruber,et al, 2010).
Many administrators at post-secondary schools have realized that customer satisfaction is an
indispensable means of creating a sustainable advantage in the competitive environment of
higher education (Douglas, McClelland, and John Davies, 2008). The study of satisfaction,
especially in the service industry, as Patterson et al (1996) have observed, is an important, yet
underdeveloped area. The need to measure customer satisfaction is a corollary to effectively
implementing the marketing concept. In the specifc context of higher education, there have
been some recent studies which have strived to assess satisfaction from customer perspectives
(e.g. Hampton 1993; Douglas, McClelland, and John Davies, 2008; Gruber,et al, 2010). Due to
76
the complicated nature of higher education service, assessing student satisfaction with higher
education still remains a huge challenge. The two essential issues are: (1) what attributes of
student satisfaction should be assessed; and (2) how it can be assessed.
In this paper an attempt has been made to examine several issues involved in effectively
assessing student satisfaction with higher education, employing cross-university surveys. For
this purpose, the study will frst examine the attributes of education service and the differences
of education service attributes between satisfed and dissatisfed students. Then, it will evaluate
whether most often used models or approaches can explain student satisfaction with higher
education, and which one is the most powerful tool. Finally, it will examine whether student
characteristics have signifcant effects on the performance of education service attributes, given
that they are moderator variables.
This study has made several contributions to customer satisfaction knowledge: (1) it offers
cross-sectional study of student satisfaction with higher education.; (2) it aims to identify service
attributes based on marketing mix; (3) it examines some models of satisfactions including
multi-attribute attitude theory, disconfrmation theory and gap analysis in the context of the
higher education area; (4) it incorporates student variables as moderators through examination
of effects on student expectations and perceived performance of service attributes.
Theory and Hypotheses Development
Multi-Attribute Services and Satisfaction
Satisfaction is defned as an effective state that is the emotional reaction to a service experience
(Olive, 1980, Cadotte, Woodruff, and Jenkins 1987, Yang and Fang 2004). Service is inherently
variable and lacks consistency because of its intangibility and the complicated needs and desires
of customers. To overcome this weakness, multi-attribute attitude models, which are used to
correctly identify the underlying dimensions with which a customer evaluates perceived service
performance and expectations, was suggested in the context of customer satisfaction (Yang
and Peterson 2004). This model has some advantages in the service area, both theoretical and
managerial. First, customers are more likely to render evaluations of their service experiences of
satisfaction at an attribute level, rather than at the product level (Gardial et al. 1994). Second, an
attribute-based approach enables researchers to conceptualize commonly observed phenomena,
such as customers experiencing mixed feelings toward a package of services. The attribute-
level approach provides a simple and elegant solution: Mixed feelings toward a product exist
because a customer may be satisfed with one attribute, but dissatisfed with another. Third,
an attribute-level approach to satisfaction affords researchers a higher level of specifcity and
diagnostic usefulness compared with the product level or overall approach (Yang, Peterson,
and Huang, 2001; Yang, Peterson, and Cai, 2003). Finally, there is some evidence that
attribute-level performance/disconfrmation and overall satisfaction are qualitatively different
constructs (Oliva, Oliver, and Bearden 1995), and, if treated interchangeably, specifc product
issues may be hidden by global customer satisfaction responses (Oliva, Oliver, and Bearden
1995; Yang, Peterson, and Cai, 2003). Thus, studying satisfaction at the attribute level can help
extend both conceptual and empirical understanding of the phenomenon. As to the context of
higher education service, it is logical to regard service attributes as good bases of satisfaction
evaluation.
77
Instead of searching for more appropriate service attributes, some studies in satisfaction research
have tried to examine the effect of more moderate variables, such as information satisfaction,
desire (Spreng, MacKenzie and Olshavsky, 1996), price satisfaction (Voss, Parasuraman, and
Dhruv Grewal 1998), fairness (Patterson, Johnson, and Spreng, 1997). These variables are
mostly related to some marketing mix variables. For example, information satisfaction is
related to promotion, and attributes satisfaction is related to product.
Following their reasoning, we can even explore more contingent variables, such as package
or place. Key reasons for searching for a wider range of moderators may reside in efforts to
build a more universal model for satisfaction. However, we think that these moderate variables
are often incorporated into service or product attributes by the customer and may be more
appropriately listed as attributes other than moderate variables. Some scholars point out that
different satisfaction processes operate under different conditions, such as across different
product categories, for high versus low-involvement products, or for products versus services,
often yield confict results (Anderson 1994; Bolton and Drew 1991b; Cadotte et al. 1987;
Halstead et al. 1994; Oliver 1989; Spreng et al. 1996). Therefore, we would propose that, from
a marketing perspective, service attributes should be based on marketing mix while recognizing
the specifc service characteristics.
In their study of reviewing the impact of service attributes on customer satisfaction and
dissatisfaction, Iacobucci and Ostrom (1995) identifed some marketing related aspects
of service, notably price, level of quality, friendliness of the service personnel, the degree
of customization of the service, all of which are effcient factors in explaining customer
satisfaction. In the higher education context, there are many versions used to measure higher
education service attributes; most are essentially related to marketing mix variables. For
instance, a widely used and well-known one (e.g. DeVore and Handal, 1981; Hampton, 1993),
which was created by Betz, Klingensmith and Menne (1970), includes fve factors, namely,
studying conditions, recognition, compensation, quality of education, and social life. These
factors are essentially related to marketing mix variables: compensation is related to price,
quality of education to product, social life to package, recognition and studying condition is
related to place. Therefore, based on marketing mix variables, we construct education service
attributes though revising the design of Betz, Klingensmith and Menne (1970).
Previous studies illustrate that different service attributes of higher education embody varying
degrees when infuencing student satisfaction. Basically, quality of education is the most
important factor and is related directly to student satisfaction (Howard and Maxwell, 1980,
Hampton, 1993). Other resources are somewhat confused, depending on the methods employed,
the nature of colleges and the samples that researchers collected.
Once the primary attributes of education service are determined, the next relevant issues are:
which group should we be carefully looking for? Satisfed students or dissatisfed students,
or both? Most researches done to date in durable goods areas put emphasis on dissatisfed
customers. However, quite a few studies in the service industry and the higher education area
show that the causes of dissatisfaction are not necessarily linked to the observer of the (dis)
satisfaction (e.g. Johnson, 1995, Yang and Fang 2004). Johnson (1995) suggests that it is more
appropriate to study the causes of satisfaction instead of dissatisfaction for satisfaction in the
78
service industry. From a managerial standpoint, it is important for administrators to understand
the different attributes between satisfed students and dissatisfed students (Yang and Fang,
2004). Therefore, we propose the following Hypotheses:
H
1a
: All fve marketing mix related higher education attributes are signifcantly related to
customer satisfaction with higher education.
H
1b
: For these fve service attributes, satisfed students will signifcantly differ from
dissatisfed students.
Which Model Predicts Best?
Due to the complicated nature of higher education as a service industry, assessing student
satisfaction with higher education still remains a frequently troublesome issue. Quite a few
models have been employed to examine the causes of student satisfaction with college from
customer perspectives (e.g. Barry, Gilly and Schucancy, 1982; Hampton 1983, 1993; Hawes
and Gilsan 1983; Schmidt, Debevec, and Comm, 1996; Douglas, McClelland, and John Davies,
2008; Gruber,et al, 2010). Among these studies, the following three models or methods were
heavily employed to measure student satisfaction with higher education: disconfrmation
model (Conant, Brown, and Mokwa, 1984) or gap analysis (Hampton, 1993); multi-attributes
approach (Douglas, McClelland, and John Davies, 2008; Gruber, et al, 2010).
Disconfrmation Model.
The dominant conceptual model in the satisfaction literature is the model of disconfrmation of
expectation. This model theorized that satisfaction is a function of the discrepancy between a
customers expectation about the performance of a product and obtained product performance
(Oliver, 1978, Churchill & Surprenant, 1982; Tse & Wiltob, 1988; Yi, 1990, 1994). The
expectation or disconfrmation model is also the most popular model for satisfaction studies
in the higher education context (e.g. Conant, Johnson, and Mokwa, 1984; Hampton, 1993).
Hampton (1993) used gap analysis to detect the factors and items that are mostly concerned
with student satisfaction.
Some customer satisfaction researchers have questioned the expectation model. La Tour and
Peat have been highly critical of this approach taken by satisfaction research (1978). First,
they suggest that this major methodological problem centers around researches measuring the
impact of expectation on perceived product performance, rather than measuring the impact
of expectation on satisfaction. This occurs because performance evaluations do not contain
an evaluation component; and therefore, there is no way to ascertain whether the customer is
satisfed or dissatisfed with the level of obtained performance. Furthermore, satisfaction is a
relative phenomenon rather than an absolute one. Though the disconfrmation of expectation
also assumes customer satisfaction is a relative one, it is too strict to account fully for customer
satisfaction.
Multi-attributes weighted attributes model.
Multi-attribute attitude models have received considerable attention from marketing researchers
and practitioners (Shocker and Srinivasan, 1979, Yang, Peterson, and Cai, 2003). The basic
notion of these different models is that customers form attitudes toward products or services
on the basis of their attributes, which in turn, are used to explain and/or predict product/brand,
79
service preference or choice. The multi-attributes model has actionable managerial implications
because, as a diagnostic approach, it is useful in detecting factors that could improve overall
satisfaction of the product or service.
Performance Model.
With regard to services, based on Oliver (1980), Jayanti and Jackson (1991) state that when
performance judgments tend to be subjective (as in services due to intangibility) expectations
may play only a minor role in the formation of satisfaction (p. 603). They suggest that
satisfaction in services may be a function of performance alone. Performance alone could be
enough to explain customer satisfaction.
Among the relative importance of the effects of performance, weighted attributes and
disconfrmation on customer satisfaction, the empirical results are often conficted. Churchill
and Surprenant (1982) found that both disconfrmation and performance were signifcant
antecedents of satisfaction for a low-involvement product, but only performance was
signifcant for a high-involvement product. In other instances, Tse and Wilton (1988) found
that both disconfmation and performance had signifcant effects for a high-involvement
product, but performance was stronger. Patterson (1993) also found the opposite pattern
with a high-involvement product (home heater), in that performance had a stronger effect
than disconfrmation. This has prompted some scholars to suggest that different satisfaction
processes operate under different conditions, such as across different product categories, for
high versus low-involvement products, or for products versus services (Anderson 1994; Bolton
and Drew 1991b; Cadotte et al. 1987; Halstead et al. 1994; Oliver 1989; Spreng et al. 1996).
In the higher education context, most studies utilized the disconfrmation model and found
that disconfrmation has signifcant impact on satisfaction (Hampton, 1993). There is a lack
of consistent results, however, with some studies showing a stronger effect of performance,
whereas others show a stronger effect of disconfrmation. Furthermore, it is surprising that
there is a lack of studies comparing the relative effects of all three concept paradigms on
student satisfaction.
Based on recent studies in the service area, Hypotheses 2 and 3 are proposed as the following:

H
2
: Performances, Multi-attributes, Disconfrmations (Gaps) will have signifcant impact
on student satisfaction.
H
3
: Performance directly accounts for student satisfaction with higher education and is the
best predictor in the higher education context.
Student Characteristics as Moderators
Empirically, customer satisfaction/dissatisfaction is found to be correlated with various
socioeconomic and demographic variables, although the statistically signifcant relationship
accounts for relatively small percentages of variance in customer satisfaction/dissatisfaction
(Day and Bodur, 1977; Ash 1978). In their model of determinants of customer satisfaction
with business-to-business professional service, Patterson, Johnson and Spreng (1996) found
that the service attributes are all important to customer satisfaction/dissatisfaction, and that
their importance varies with such moderators as purchase situation and individual level. Within
80
the context of higher education, Astin (1987) argued that student satisfaction with college is
determined not only by service attributes, but by the impact of student characteristics. Some
prior studies have examined the relationships between student variables, such as gender, major,
age, ethnicity, GPA (Howes, Maxwell, 1980), part or full time status, and education service
attributes (cf. Starr, Bertz, and Menne, 1972; Powers 1985; Darren et al, 1989; Stage 1988).
Sturtz (1971) found that older students pay more attention to their recognition and education
quality than younger students. In addition, older students are likely to require less social life or
informal activities on campus since the family unit plays a larger part in older students lives
(Hiltumen, 1965). According to Bean and Vesper (1981), recognition is more important for
female students than male students.
Furthermore, some studies address the indirect effects of some student variables on student
satisfaction with higher education. For example, Terkla and Pagano (1990) pointed out that
fnancial situation affects student expectation for university education quality and infuences
their satisfaction with higher education. While examining the effects of major on satisfaction
with college, Schmidt, Debevec and Comm (1987) fnd that different majors lead to various
perceptions of service attributes, which, in turn, infuence their perception of satisfaction with
college.
However, no comprehensive investigations have been done on how student characteristics
indirectly affect satisfaction with higher education via performance or expectation of service
attributes. To investigate whether the importance or expectation of education service attributes
(recognition, education quality, social life, compensation and studying condition) varies
across contingency variables, studies should incorporate student characteristics into design
as moderator variables. Since relatively few studies on these student variables impacting
service attributes have been conducted previously in customer satisfaction literature in the
higher education context, propositions of the relationship between these variables represented
and satisfaction with higher education may be a step toward an integrated theory of student
satisfaction with higher education. As a result, Hypotheses 3a and 3b are as follow:
H
3a
: The effects of performance of education service on student satisfaction will vary on the
basis of student characteristics.
H
3b
: The effects of expectation of education service on student satisfaction will vary on the
basis of student characteristics.
Methodology
Measures
A questionnaire developed by Betz, Klingensmith and Menne (1971) was used as a guide to
develop the survey for this study. Their fndings showed that College Student Satisfaction
Questionnaire (CCSQ) is one of the few psychometrically sound instruments for the
measurement of student satisfaction within the context of higher education. In its present from,
CSSQ consists of fve scales, namely, studying conditions, recognition, compensation, quality
of education, and social life. Their survey contained seventy statements relating to student
education services and encounters.
81
Through a pretest procedure, this instrument was refned and condensed. Several classes of
students, both graduate and undergraduate, were asked to determine which of these seventy
statements were relevant to their educational experience. They were also asked to add attributes
that were missing from the list. The fnal version contained nine items for each attribute
of education service. Each item asked for two responses: performance and importance.
Performance was measured by having students respond to the items on a seven-point Likert
scale that ranged from very satisfed to very dissatisfed. Importances were measured on a
similar scale ranging from very important to very unimportant. Student expectation has been
measured by the importance of all service attributes (Hampton, 1993; Polcyb, 1986).
The database contained measures for several constructs. There was one dependent measure for
this analysis: overall satisfaction. A seven-point overall measure of how students felt about the
performance of education service was utilized on a range from, Overall Im very satisfed
to Overall I am very dissatisfed. Furthermore, to evaluate the contingent effect of student
characteristics on satisfaction, eleven student variables were listed as general information at
the end of questionnaire: (1) major, (2) gender, (3) age, (4) class, (5) year in the school, (6)
employment status, (7) fnancial aid, (8) GPA, (9) ethnicity, (10) religion (11) part versus full
time job. Each variable was measured by number in terms of the order showed in questionnaire.
Sample
Participants in this survey were students who were randomly selected from three major
Universities in the USA, one business college in The Netherlands, and alumni from one of three
universities. Using alumni as participants is also suggested by Gwinner and Beltramini, 1995.
Students were from different majors, and classes. This procedure was used in order to obtain a
sample reasonably representative of students across different universities. Except for alumni to
whom questionnaires were mailed, all the questionnaires were fnished in class. Students were
instructed before answering the questionnaire. The collected effective sample was 1475.
Model Construction
Performance model. In this model, satisfaction is a function of performance of all attributes.
We call this model the performance model , which can be simply expressed as :
n
S
edu
= P
i


I=1

where : S
edu
= satisfaction with education serice; P
i
= performance of attribute I;
n = number of attributes.
Disconfrmation Model (gaps model). The disconfrmation model in this study can be
computed by the following formula, despite its complicated nature in some studies.
n
Di = P
i
- I
i
)

I=1
Where: D
i
= Disconfrmation with attribute I; A
j
= attitude toward attribute I;
P
i
= performance of attribute I; n = number of attributes.
The satisfaction function using disconfrmation or gap as variable is formulated as
82
S
edu
= f (D
i
)
Multi-attributes weighted attributes model. Although there are a variety of alternative
specifcations of the multi-attribute model, the most prominent one is the Fishbein model
(Bettman, Capon and Lutz, 1975), which may be formulated as
n
A
I
= I
i
P
i


I=1
where :
A
I
= attitude toward attribute I; P
i
= performance of attribute I;
I
i
= important weight given attribute I; n = number of attributes.
Data Analysis and Findings
Service Attribute. In Table I, reliability analysis was performed on the fve subscales by using
Cronbach alpha. The high alpha coeffcients demonstrate good internal consistency for the
various measurement scales used. Table I also contains the product moment correlations
among fve service attributes and overall satisfaction. Overall satisfaction has a signifcant,
positive correlation with each of the fve satisfaction dimensions (p<0.001). In particular,
education quality, compensation and recognition have relatively higher correlation with overall
satisfaction. Hence, Hypothesis 1a is supported.
Table I: Correlation matrix and Alpha Reliability Estimates for Factors
Correlaton Matrix Number of Cronbachs
Factors 1 2 3 4 5 6 Items Alpha
1 Education Quality 1.00 9 0.817
2 Studying Facilitation 0.46 1.00 9 0.700
3 Social Life 0.24 0.54 1.00 9 0.835
4 Recognition 0.73 0.39 0.15 1.00 9 0.856
5 Compensation 0.72 0.43 0.22 0.71 1.00 9 0.864
6 Overall Satisfaction 0.56 0.33 0.31 0.41 0.48 1.00 9 /
Satisfed and dissatisfed. Two groups, satisfed and dissatisfed were formed based on the rated
scale of overall satisfaction. For more clarity, we leave respondents with the media score 4
out of consideration. Thus, all respondents with a scale ranging from 1 to 3 are classifed as
dissatisfed, all respondents with scores ranging from 5 to 7 are classifed as satisfed.
Table II shows the means of fve primary attributes of higher education and overall satisfaction
for satisfed and dissatisfed students. All of these dimensional means of satisfed students are
signifcantly different from dissatisfed students at the level of p<0.001. Specifcally, satisfed
students gave higher scores for each service attribute than those of dissatisfed students.
The order is somewhat different, for example, education quality received the highest mean
performance among satisfers, but received the second lowest mean for the dissatisfed group.
The basic idea here is that these fve service attributes are signifcantly related to both satisfed
83
and dissatisfed students. Moreover, dissatisfed customers are always reluctant to report, and
the number of this group of respondents is quite a bit lower. In this study, only 156 students are
classifed as dissatisfed among 1475 students. Therefore, we should analyze both satisfed and
dissatisfed, instead of the dissatisfed group alone. Overall, Hypothesis 1b is supported by the
results.
Table II: Different Perceptions of Service Attributes Performance and Satisfaction
Measures among Satisfed and Dissatisfed Students
Satisfed Students Dissatisfed Students
Dimensions Mean S. D Mean S. D T-Value Sig.
Overall 5.58 0.66 2.55 0.71 50.60 0.00
Compensation 4.84 0.77 3.82 0.91 15.22 0.00
Social Life 4.56 0.83 3.86 0.93 9.57 0.00
Facilities 4.26 0.75 3.52 0.86 10.49 0.00
Recognition 4.67 0.93 3.65 0.91 12.56 0.00
Education
Quality 4.91 0.77 3.56 0.87 19.21 0.00
Fit of Model Table III demonstrates the good ft of three models which are used to predict
overall student satisfaction by employing the same database. The results suggest all three
measures can signifcantly predict overall student satisfaction. Consistent with the statement
of Jayanti and Jackson (1991), the R squares in Table III indicate that performance (0.447) can
explain overall satisfaction better than both the multi-attributes and disconfrmation models.
84
Table III: Stepwise Regression Results
Models Independent Variables Beta SIG. R
2
Performance Model 0.447(p<0.001)
Education quality 0.484 0.000
Social life 0.192 0.000
Compensation 0.146 0.000
Studying condition 0.019 0.452
Recognition 0.000 0.975
Fishbein Multi-
Attribute 0.368(p<0.001)
Education quality 0.436 0.000
Social life 0.187 0.000
Compensation 0.127 0.000
Recognition -0.067 0.047
Studying condition -0.030 0.289
Disconfrmations 0.252(p<0.001)
Education quality 0.442 0.000
Compensation 0.098 0.000
Recognition 0.055 0.078
Social life 0.046 0.063
Studying condition 0.006 0.836
Hence, both our Hypotheses 3 and 4 are empirically confrmed. Additionally, perhaps the
most interesting and surprising fnding is that multi-attribute attitude has greater impact on
satisfaction than the disconfrmation model has, although the disconfrmation model is the most
popular one in the satisfaction research area.
Table III also sheds light on the relative importance of service attributes in effecting student
satisfaction with higher education. All three methods indicate that the quality of education is
the best predictor of student satisfaction, which is consistent with other fndings (Hampton,
1993, Cook and Zallocco, 1979). As we previously mentioned, there is some diversity in the
order and signifcance of four other attributes when using different models. For instance,
social life signifcantly contributes to satisfaction in both the performance and multi-attributes
models, whereas it is not signifcant in the disconfrmation model. Recognition is perceived to
signifcantly explain the satisfaction only in the multi-attributes model. Also, compensation
other than social life is in second position in the disconfrmation methods. This also explains
why some conclusions confict, even with the same database or similar research design while
using different models. The rationale behind these differences needs be further studied and
may yield some valuable fndings. The relatively low R squares also indicate the diffculty of
predicting student satisfaction, even with use of the best model and larger samples, due to its
complexity and the diversity of student priorities and desires.
85
Student variables and service attributes.
For analytical convenience, and due to space limitation, some student aspects are omitted.
Eight characteristics are chosen for further consideration: age, gender, class, employment
status, GPA, part-time work or full-time work; living on campus or not, part-time and full-time
student. The fndings in Table IV indicate that student characteristics have quite different effects
on the performances and expectations of fve education service attributes. Further discussion
elucidates important points.
Studying facilities.
The result of a wide variety of students basically having no differences on the performance
study, except for student with different GPA, is not surprising. However, as to expectation,
students with different aspects obviously have various expectations for study facilities. Students
who are younger, or in lower level classes, or non-working, or who have lower GPAs, or are
part-time have higher expectations for study facilities than do others.
Education quality.
The performance of education quality received more attention by older, female students,
or by students who were in a high level class, non-working, had higher GPAs, or lived on
campus. The same thing happened for the expectation of education quality, except that there
is correlation between part-time and full time students expectation with quality. There is no
signifcant difference between performance and expectation of education quality for specifc
students.
Recognition.
Students who are older, or female, or in a high level class, or working, or live off campus,
or have high GPAs have a preference for being recognized by professors or education server
providers. With regard to recognition, students with different ages, whether they are part-time
or full time, have the same expectation in terms of recognition attributes.
86
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87
Compensation.
Students who are older, female, in a high level, have a high GPA care more for compensation,
i.e, the ratio of output and input. For expectation of compensation, there is no signifcant
correlation between older and younger students, or between higher level and lower level class
students, or between part-time and full-time students.
Social life.
Finally, social life is more attractive to students who are young, male, in a lower level class,
non-working, working part-time, have a relatively low GPA, and who live on campus. The
only difference between performance and expectation is that full-time students have higher
expectation for social life than those of part-time students while their perceived performance
denotes no signifcant difference.
These fndings are interesting to those administrators who are particularly attentive to individual
or specifc groups and who know how to accommodate the priorities and needs of different
student groups, based on their demographic characteristics.
Discussion
The results of this research have implications for researchers as well as education administrators.
The marketing mix-based service attributes are signifcantly related to overall satisfaction. Our
results suggest that, instead of paying attention to dissatisfed students alone, it may be more
appropriate to derive deep insights into what leads to satisfaction in the context of a service
area such as higher education, This is due to (1) satisfed students are in the majority; and (2)
dissatisfed students share basically the same perspective of service attributes. In assessing
student satisfaction with higher education, performance of service attributes is demonstrated
as the best indictor of satisfaction. In addition, the multi-attribute model performs better in
explaining satisfaction than the disconfrmation model or gap analysis. Using different models
can yield certain differences, even utilizing the same database.

The paper also shows that individual student characteristics indirectly impact satisfaction by
infuencing the performance and expectation of service attributes. Incorporation of individual
characteristics within a suitable theoretical structure, as moderating variables, would prove
to be a more promising direction for future research pursuits. Administrators should devote
more attention to the different priorities and desires of the particular groups based on their
demographic aspects. From a practitioners standpoint, administrators need to adopt strategies
to manage or positively infuence the way in which students affect one another and to implement
effective mechanisms by which they can support each others experience. These interactions
tend to improve student satisfaction with the education experience.
The instinctive reaction of education service providers is to assume that customer-to-customer
interactions are beyond their control. Nevertheless, particularly in educational environments
where the customer spends a longer period of time in the environment, the signifcance of
customer-to-customer interaction may be greater than that of the customer-to-service-agent
interaction. Rowley (1996) explores some of the approaches to customer compatibility
management in higher education. Fundamentally, any assessment of satisfaction needs to
acknowledge the mutual infuence among customers.
88
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