The Role of Intensity, Credibility, Homophilous Source, and Valence on eWOM in the Course of Intention to Purchase Cosmetic Products on Instagram

The Role of
Intensity, Credibility,
Homophilous Source, and
Valence on eWOM in the
Course of Intention to
Purchase Cosmetic Products
on Instagram
Prepared by:
Putri Amandhari
14/372725/PEK/19520
1
THESIS DEFENSE
Supervisor: Prof. Basu Swastha Dharmmesta, MBA., Ph.D

Introduction
e-marketer.com (2014) on “Consumers Read
More Local Online Reviews—Thanks to Rumors
of Fakes?”
Internet penetration leads into fast forward communication
“..consumer still read more online reviews before putting
trust on their purchasing stage”
To Gain, Interact and Receive in real time
Based on Jejak Pendapat (JAKPAT)
Instagram Sellers Behavior in Indonesia – Survey Report 2015,
Beauty products, cosmetics and pharmacies shows within
10.82% ranked #2 after fashion products (52.51%).
The Role of Intensity, Credibility, Homophilous Source and Valence on eWOM in the Course of Intention to Purchase Cosmetics Product on
Instagram
e-commerce or purchasing via Internet is one of the most
rapidly growing forms of shopping (Levy and Weitz, 2001).
Online review Effectiveness -> eWOM -> Purchase Intention

Research Questions
1) Does the role of intensity on eWOM-Effect affects consumer’s cosmetic
purchase intention on Instagram?
2) Does the role of perceived credibility on eWOM-Effect affects
consumer’s cosmetic purchase intention on Instagram?
3) Does the role of homophilous source on eWOM-Effect affects
consumer’s cosmetic purchase intention on Instagram?
4) Does the role of negative valence on eWOM-Effect affects consumer’s
cosmetic purchase intention on Instagram?
5) Does the role of subjective norms moderate the relationship among
eWOM-Effect; through intensity, credibility, susceptibility, valence with
intention to purchase cosmetic products on Instagram?
3
Instagram

Research Objective
4
Instagram
1)To identify the characteristics of Instagram’s female
consumer in buying cosmetics products on Instagram.
2)To identify which roles of intensity, credibility, susceptibility
and valence on eWOM-Effect in which more preferable and
could affects intention to purchase cosmetic products on
Instagram.
3)To identify does the role of subjective norms moderate the
relationship between eWOM-Effect; through intensity,
credibility, susceptibility, valence and which affect the most on
intention to purchase cosmetic products on Instagram.

E-WOM, E-commerce,
Social Shopping and
UGC
…Businesses are actively
exploring new methods to
combine the power of social
networking with online and
offline sales. (Shen, 2012).
User Generated Content
(UGC) or UGC refers to any
own created material
uploaded to the Internet by
non–media and it has a
greater influence on people’s
consumption (Bahtar and
Muda 2016: 338)
5
Instagram:
Features and Functions
….Brand community comes
alive where past and present
customers will share their
reviews or experience on
comment sections and
future customers will make
their research based on the
reviews that they read (Latiff
and Safiee, 2015).
Theory of Planned
Behavior: Subjective norms
-According to TPB, an individual’s
performance of a certain
behavior is determined by his
or her intent to perform that
behavior.
According to Ajzen (2016),
subjective norm is the
perception of social pressures
to undertake or not to
undertake a given behavior.
Literature Review
Instagram

Instagram
Operational Definition
Goyette et al. (2010)
measured the WOM
intensity through
eWOM activity,
volume, and
dispersion.
intensity
Park and Lee (2009)
examined that
negative eWOM is
greater than positive
eWOM in the course
of influencing
consumer’s
information on
purchase decisions.
NEGATIVE VALENCE
Homophile is based
on the degree
which consumers
exhibit similarities
with regard to
certain attributes,
such as age, sex
and lifestyle
(Rogers, 1983 in
Steffes and Burgee,
2009).
HOMOPHILOUS
SOURCE
Goldsmith et al. (2000)
defined that expertise
and trustworthiness
have generally been
considered sub-
dimensions of
perceived credibility.
PERCEIVED
CREDIBILITY

Instagram
Operational Definition
Subjective norms refer
to consumer’s
perception of whether
other people in their
society want them to
display a particular
behavior (Ajzen, 2016)
SUBJECTIVE NORMS
Purchase intention
referred to the extent
to which a consumer
wants to purchase
products.
INTENTION TO PURCHASE

H1. Intensity as in eWOM-Effect has positive impact on
intention to purchase.
H2. Perceived credibility as in eWOM-Effect has positive
impact on intention to purchase.
H3. Homophilous source information as in eWOM- Effect
has positive impact on intention to purchase.
H4. Negative valence as in eWOM-Effect has positive
Hypotheses
Instagram

H5a. Subjective norms moderate the relationship within
intensity and intention to purchase.
H5b. Subjective norms moderate the relationship within
perceived credibility and intention to purchase
H5c. Subjective norms moderate the relationship within
homophilous source and intention to purchase.
H5d. Subjective norms moderate the relationship within
negative valence and intention to purchase.
Hypotheses
Instagram

Research Scheme
eWOM Effect
Intensity
Perceived Credibility
Homophilous Source
Negative Valence
Intention to
Purchase
Subjective Norms
H1 (+)
H2 (+)
H3 (+)
H4 (+)
H5a (+) H5b (+)H5c (+) H5d (+)
Modified from Cheung, C. and Thadani, D. (2012), “The Impact of Electronic Word-of-Mouth
Communication: A Literature Analysis and Integrative Model,” Decision Support Systems, Vol.54,
No.1, pp.461-470. And Jalilvand, M.R. and Samiei, N. (2012),"The Impact of Electronic Word of
Mouth on a Tourism Destination Choice: Testing the Theory of Planned Behavior (TPB).” Internet
Research, Vol.22, No.5, pp.591-612.
Instagram

Research Design, Population and Sample
Research Design: Quantitative with survey method to explore the fact with precise
interpretation points of view in order to find a systematical picture of accurate facts.
11
Instagram
Population and Sample:
1)Female
2)Age 20 to 30 years old
Sampling Design:
1) who have Instagram account,
2)use Instagram as reference points in gaining
information about cosmetics and beauty products,
3)but never purchase cosmetics and beauty
products on the online shop in Instagram.

12
Pre Test
Instagram
KMO= 0.738,
Indicates good partial correlation exhibited in the
data for this study. The Bartlett’s test of Sphericity
result is 0.000, which means very significant.
Coefficient Cronbach’s Alpha of each
variable in this research is bigger than
critical value 0.70.
57 respondents for pretest that held on July 15th
, 2016 until 19th
July 2016.

Research Analysis
Classic Assumption Test
 Normality Test
 Multicollinearity Test
13
Instagram
Hypothesis Testing
Multiple Regression Analysis
Moderated Regression Analysis
t- test
F –test
Coefficient of determination (R2
)

14
Validity and Reliability Test (1st
iteration)
Instagram
KMO = 0.833
MSA exceed 0.50, this indicates good
partial correlation exhibited in the
data for this study. The Bartlett’s test of
Sphericity result is 0.000, which means
very significant.
210 respondents to find validity and reliability on the big sample.

15
Validity and Reliability Test (2nd
iteration)
Instagram
Indicates good partial correlation
exhibited in the data for this study. The
Bartlett’s test of Sphericity result is
0.000, which means very significant.
Coefficient Cronbach’s Alpha of each
variable in this research is bigger than
critical value 0.70.
210 respondents to find validity and reliability on the big sample.

The results shown that all the independent variables in this research have VIF < 10
Means there are No Multicollinearity for each variables
Classic Assumption Test
Instagram
If significance numbers of Kolmogorov
Smirnov test any value above 0.5, means
that it is normally distributed.
Table 4.12 Result of Kolmogorov-Smirnov
Kolmogorov-Smirnov Z 0.468
Asymp. Sig. (2-tailed) 0.981
Table 4.12 Result of Kolmogorov-Smirnov
Kolmogorov-Smirnov Z 0.468
Asymp. Sig. (2-tailed) 0.981

Standardized
Coefficients t Sig Status
Beta (β)
Intensity 0.232 4.095 0.000 Accepted
Perceived Credibility 0.310 5.464 0.000 Accepted
Homophilous Source
Negative Valence
0.098
0.301
1.697
5.096
0.091
0.000
Not Accepted
Accepted
Dependent Variable: Intention to Purchase
17
Instagram
Hypothesis Testing (Multiple Regression)
44.8% variance in purchase intention is explained by intensity, perceived
credibility, homophilous source, and negative valence, with the rest 55.2%
were explained by other variables that are not involved in the model.
Based on those values, it can be concluded that the homophilous source is not significant
(p=0.091>0.050). And also since effect of perceived credibility has the highest beta value (β=0.310),
means that credibility has the biggest influences on consumer’s intention to purchase compared to other
variables.

18
Hypothesis Testing (Moderated Regression)
Table 4.16 Result of Coefficient of determination (R
2
) and F test
Moderation Adjusted R
2
F Sig.
Intensity
* Subjective Norms
0.230 21.808 0.000
Credibility
* Subjective Norms
0.266 26.281 0.000
Homophilous Source
* Subjective Norms
0.196 17.961 0.000
Negative Valence
* Subjective Norms
0.326 34.638 0.000
Dependent Variable: Intention to Purchase
Within range from 19.6% to 32.6%
variance in purchase intention is explained
by moderation effect of subjective norms
on intensity, perceived credibility,
homophilous source and negative valence.
18
Effect of subjective norms on negative
valence has the highest beta value
(β=1.614), means that subjective
norms have the strongest effect on
negative valence and consumer’s
intention to purchase compared to
other variables.

Hypothesis Beta (β) Sig. Status
H1
Intensity as in eWOM-Effect has
a positive impact on intention to
purchase.
0.232 0.000
 H1 Accepted
 In line with existing research by
Goyette et al (2010)
H2
Perceived credibility as in
eWOM-Effect has a positive
0.301 0.000
 H2 Accepted
Harmon and Coney (1982)
H3
Homophilous source information
as in eWOM-Effect has a positive
0.098 0.091
 H3 Not Accepted
 Contrast with existing research by
Brown and Reign (1982) in Cheng
and Zhou (2010)
H4
Negative Valence as in eWOM-
Effect has a positive impact on
0.301 0.000
 H4 Accepted
Park and Lee (2009)
Summary of Hypothesis Testing Result
Instagram

Hypothesis Beta (β) Sig. Status
H5a
Subjective norms moderate the
relationship between intensity and
1.142 0.005
 H5a Accepted
 In line as extension of existing
research by Thoumrungroje
(2014)
H5b
relationship between perceived
credibility and intention to
purchase.
0.918 0.018
 H5b Accepted
research by Cheng and Zhou
(2010)
H5c
relationship between homophilous
source and intention to purchase
1.550 0.000
 H5c Accepted
Ma et al (2009)
H5d
relationship between valence and
intention to purchase
1.614 0.000
 H5d Accepted
research by Mazzarol (2007)

22
H1. Intensity is found to have
significant influence on consumer’s
intention to purchase beauty and
cosmetics products on the online
shop in Instagram.
H2. Perceived credibility is found to
have significant influence on
consumer’s intention to purchase
beauty of cosmetics products on
online shop in Instagram.
H3. Homophilous source is found to
have no significant influence on
1 The more intense information that
consumer seen, read or perceived,
the more consumer intend to purchase
the products.
2 Consumer believe of receiving
information from someone they trust or
from the expertise that consumer
believe could deliver non harmful and
the truthful information.
3 Consumers realized that everyone could
write anything about their comments or
opinion on Instagram comment section
without any matter doesn’t necessarily
determine consumer intention to
purchase cosmetics and beauty products
on the online shop in Instagram.
Instagram
Conclusions

23
H4. Negative valence is found to
have significant influence on
H5. This study concludes that other’s
consumers opinions matter in any
levels on eWOM-Effect, especially
on consumer pre-purchase stage
toward intention to purchase.
4. Richer information about the quality or
consumer perception in a real condition.
It could give more ways of agreeing and
disagreeing the information that helps
consumer to form their perspective on
5. Others’ opinion matter because the
basic purpose of using social media that
are basically to share information and to
present what other’s likes or wants.
Instagram
Conclusions

1) Coefficient of determination (Adjusted R2
)
configured from the research model in
moderated relationship between independent
and dependent variables is relatively low.
1) As this study only focuses on one-sided gender.
1) This study is a snapshot of consumer behavior
on Instagram, specifically on Instagram’s
comments. This implies that it is only limited to
comment on the online shop Instagram and
exclude any other medium happening
nowadays.
24
Limitation of the Study
Instagram

1) Further study is needed to include additional
variables outside the variables in this research to
examine deeper about consumer online purchase
intention of cosmetics or beauty products.
2) Focusing on two-sided gender of male and female.
3) Applying consumer’s online behavior using
preference by including the all social networking
sites (e.g. Facebook, Twitter, Pinterest, Youtube
etc.) could give more generalized idea about the
effectiveness of eWOM through some medium.
25
Recommendations
Instagram

26
- THANKYOU -
Putri Amandhari 2016 x
Instagram

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28

Lee, J.; Park, D. H.; and Han, I. (2008), “The Effect of Negative Online Consumer Reviews on
Product Attitude: An Information Processing View,” Electronic Commerce Research and
Applications, Vol.7, No.3, pp.341.
Levy, M. and Weitz, B. (2001). Retailing Management, 4th
ed., New York: McGraw-Hill.
Ling, K.; Chai, L.; and Piew, T. (2010), “The Effects of Shopping Orientations, Online Trust and
Prior Online Purchase Experience toward Customers’ Online Purchase Intention,”
International Business Research, Vol.3, No.3, pp.63-76.
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www.newsroom.barclays.com/Press-releases/Nearly-half-ofconsumers-to-besocial-
shoppers-by-2021-8da.aspx, accessed February 20, 2016.
Ma, L.; Krishnan, R.; and Montgomery, A. (2015), “Latent Homophily or Social Influence? An
Empirical Analysis of Purchase Within a Social Network,” Management Science, Vol.61. No. 2,
pp.454-473.
Mazzarol, T.; Sweeney, J. C.; and Soutar, G.N. (2007), “Conceptualizing word-of-mouth
activity, triggers and conditions,” European Journal of Marketing, Vol.41, No.11/12, pp.1475-
94.
Mudambi, S. M. and Schuff, D. (2010), “What Makes a Helpful Online Review? A Study of
Customer Reviews on Amazon.com,” MIS Quarterly, Vol.34, No.1, pp.185-200.
Olbrich, R. and Holsing, C. (2012), “Modeling Consumer Purchasing Behavior in Social
Shopping Communities with Clickstream Data,” International Journal Of Electronic
Commerce. Vol.16, No.2, pp.15- 40.
Park, C. and Lee, T. M. (2009), “Information Direction, Website Reputation and e-WOM
Effect: A Moderating Role of Product Type,” Journal of Business Research. Vol.62, No.1,
pp.61–67.
Qiu, P. and Lim (2012), “Effects of Conflicting Aggregated Rating on eWOM Review Credibility
and Diagnositicity: The Moderating Role of Review Valence,” Decision Support System, Vol.
54, pp.631-643.
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END OF THE
PRESENTATION
Putri Amandhari 2016 x
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31
All relevant factors of the four major elements of eWOM communication.

The Role of Intensity, Credibility, Homophilous Source, and Valence on eWOM in the Course of Intention to Purchase Cosmetic Products on Instagram

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