Topic: Investigate the influence of service quality, word of mouth and consumer trust

on the Brand Reputation of E-Commerce Companies in Malaysia.

Chapter I
1.0 Introduction
This study serves to execute a deep dive into the E-Commerce scene and investigates

the underlying factors that helped shaping the reputation that sustains this scene. When going

through various academic sources, it became clear that a demand to further conduct research

on reputation of E-commerce companies in Malaysia is evolving. According to our

hypotheses is which Word-to-Mouth, Service quality, and Consumer Trust have a great

impact on reputation of e-commerce companies.

1.1 Background of Study

Since its early days, Internet has provided its users with a wide network that helped

connect people across the globe. Around the early 90s, the internet was finally used for

commercial purposes instead of governmental purposes only. This shift has resulted in the

biggest wave ever recorded of businesses taking their store fronts to the world wide web.

(Esmaeilpour, 2017).

Nowadays, the world of business has transformed into a melting pot where businesses

are dynamically competing to control most of the market needs. In addition, globalization has

accelerated the evolution speed in the business scene which resulted in a more intense

competition. Therefore, we ought to focus more on creating “added value” and “competitive

advantage”, depending on the approaches that haven’t been used much (Nickols, 2016). Since

this business environment is mainly customer oriented, businesses that withstood in time

have all invested in the brand itself. This investment has proved itself worthy since it had an
immediate impact on improving the offered services and creating an experience rather than a

product that attracts more customers who are tempted by it. (Alam & Yasin, 2010).

Customers are mostly attracted to the feeling that most products offer, thus the

investment made into such an intangible asset such as a brand. Researchers have confirmed

on multiple occasions that service businesses have to view branding as a key factor in the

success and they also recommend that it should be the aim of most businesses in the 21 st

century. (Krystallis & Chrysochou, 2014).

Additionally, E-businesses have managed to acquire the skill of identifying what

should resonate with the customers in order to maintain a clear public image which will result

in building up the reputation of the company. By understanding the customers behaviour,

companies will acquire a better insight on how customers interact with their store fronts and

products. These insights will help later to develop a customized marketing plan that can help

target potential buyers based on the factors that might affect their buying behaviour and run

more targeted campaigns. Scholars have stressed on the importance of sustaining the brand

and its reputation and recognized it as the key factor behind thriving and developing a

competitive advantage over other competitors in the E-Commerce scene.

During this study, we will have a closer look on the factors and what affects separate

customers in order to build a satisfying experience that will ensure customer acquisition and

build a stong reliable reputation for the brand.

1.2 Problem Statement

The main issue, that we try to underline in this paper, is to discover the reasons and

factors that affect the brand and its reputation and by consequence affect the buying power of

our potential customers in the Malaysian E-Commerce scene. The online commerce scene

has boomed lately and brought a wide range of products and options right to the door step of

the customers. By cutting out the middle men, companies have managed to cut down on costs
and improve the profit margin which allowed them to manufacture more and offer same or

better options at a lower rate. Although this seems as a utopia, the market is currently flooded

with different products and services which confused the buyers. That’s why nowadays quality

alone isn’t enough to push a product or a service and count on people to try. The market is

looking for other factors that can help him distinguish brands and place trust in them based on

their customer service, past reviews and webpage layout. This point of view was asserted by

multiple scholars across different studies. In their paper, Gefen, Karahama and Straub (2003)

ran a wide study that involved thousands of online buyers, in which they have concluded that

lack of trust between the customer and the online company is the main reason buyers might

deter and look for better options within the market. Based on this and many other papers that

share the same conclusion, brand reputation should be viewed as a key element in the

distinguishing of a certain organization. Since the main goal is to retain long lasting

relationships with the customer base to transform normal buyers into reoccurring buyers and

why not affiliates that will help into marketing the brand itself among their network (Lee et

al., 2014). Furthermore, researchers have stated that a strong trust correlates with a high-

quality services and therefore blur out the effect of other unreliable cases (Han et al., 2015).

Researchers have heavily done papers and studies concerning the efficiency of the

company’s service and reputation including other key factors. Nevertheless, not much light

was shed on the effects of consumer trust and word-of-mouth on the reputation of the

organization especially within the local E-Commerce scene (Herrero et al., 2016). Therefore,

more studies are needed to emerge and look into this area of interest. Our study aims to look

into how buyers view brands and other triggering dimensions such as service quality and

word-of-mouth in E-commerce in improving brand reputation in the market.

1.3 Objectives
 To determine relationship between Word-of-Mouth and Brand reputation of E-
commerce companies locally.
 To recognise the impact of “Service Quality” on brand reputation of different online
businesses locally.
 To inspect whether “Consumer Trust” has impacts on brand reputation of different
online businesses locally.

1.4 Questions
 How Word-of-Mouth of E-commerce companies will influence their reputation in the
market?
 What are service quality dimensions trigger reputational shift in e-commerce
companies?
 Will growth in Consumer Trust on E-commerce companies also increase their
reputation in the market?

1.5 Hypotheses
H1 – “Word-of-mouth” correlates with the level of reputation of e-commerce
companies

H2 – There is substantial positive relationship between service quality and brand

reputation of …….

H3 – The Better the consumer trust, the higher brand reputation of e-commerce
companies

1.6 Significance
Significance of current study is via analysing important determining factors that is

triggering reputation of Malaysian e-commerce companies, future reader will briefly

acknowledge with current reputation management of e-commerce companies. This paper is a

continuation of multiple previous papers but with a more lenient approach that will help us
bring the meaning closer to the Malaysian E-commerce scene and how it applies. We aim to

uncover multiple perceptions regarding online businesses and how they develop their

reputation through brand image activities to finally achieve successful long-lasting client

relationships.

1.7 Study Scope

Scope of this study is population of participants that is equal to total number of main

online shopping websites in Malaysia. Sample size of current study is consisted of total 150

students who are only done online shopping before. They will be asked on ground of external

validity.

Chapter II
2.0 Literature Review
2.1 Brand Reputation of E-Commerce Companies in Malaysia

Brand reputation has been identified by many researchers as the key element in

creating and ensuring a long-lasting relationship between clients and the business itself. It

became clear that in order to achieve the desired success and manage to reach the most with

the intended brand, businesses should invest more energy and more resources into the

development of their brand reputation (Veloutsou and Moutinho, 2009). By doing so,

businesses will have a look on the way the market perceives them and by consequence they

can identify the areas of improvements and measure their market satisfaction (Fombrun and

Rindova, 2000).

Postive brand representation is an imperative component in the attraction and retention of

customers within an organization. Which explains the struggle of new thriving companies or
existing ones with public image issues, such companies face a steeper road towards their

goals and projected milestones. The market views the organization as an entity which

explains the trust relationship that can be either maintained by providing an adherent

experience or destroyed by neglecting the public image and focusing on other components.

2.2 Independent Variables

2.2.1 Word of Mouth

In the E-commerce scene, most organizations have moved form being product

oriented to customer oriented, where they give a great deal of attention to the brand and how

to build it. Past researches have proved that “word-of-mouth” is considered as the most

efficient way to promote the brand and reach success (Vark, 2007). The internet has managed

to connect people from around the globe that could interchange information and opinions

regarding the service provided. Clients are looking into other consumers reviews and shared

experiences in order to gain a better idea and be the judge on the business brand and product.

Unfortunately, many businesses turn a blind eye to the customer retention part even though

the impact of a well understood market can offer a great advantage to the company between

the competitors. On the other hand many other are capable to view and conceive their brand

form the buyer point of view to better understand and anticipate the market reaction to the

product or service offered (Lindstrom, 2006).

2.2.1.1 Relationship with reputation

Dissatisfying product or service experiences produce WOM, which is strongly

detrimental to the company’s reputation and sales when the company does not take

immediate action to solve the problem of unsatisfactory productor service experiences (Nyer
and Gopinath 2005; Burton and Khammash 2010). How-ever, if the company treats the

complaint adequately, this rapid reaction increases consumer loyalty and satisfaction level

(Hong and Lee 2005). After WOM, prompt feedback reduces the overall impact on the brand

(Sandes and Urdan 2013).

2.2.2 Service Quality

Since businesses have moved do the online scene that the Internet offers, companies

have been flooded by a huge amount of data that their customers have produced throughout

their shopping experience. Organizations have developed multiple customer acquisition and

retention tools in order to open communication channels and gather information related to

their customers. All this data collection aims two elevate the quality of the service provided

by these companies (Featherman and Pavlou, 2002). in the E-commerce environment service

quality has been always defined by the features offered by the website to facilitate and ensure

an effective shopping procedure that starts from the web surfing and choosing the right

product to the moment when the product reached the customers doorstep (Zeithaml et al.,

2002).

2.2.2.1 Relationship with reputation

According to Radomir, L. and Wilson (2018), the higher customers' perceptions about

the competence of their financial service providers, the higher their loyalty towards the

relationship. The findings showed that perceived overall service quality and perceived

relationship investment exert a positive influence on corporate reputation.

 2.2.3 Consumer Trust
Since the evolution of Internet and the development of the e-commerce scene, the

market has been flooded by a wide range of options that left the customer baffled. with with

multiple options to choose from customers rely on the brand image of the company and their

public image to build a sense of trust that can help them decide whether the the publicize

product is worth is value. this factor is also known as e-trust which describes do a certain

level the type of experience offered and these online exchanges (Ribbink et al, 2004). More

specifically, Online trust can be defined as an internet user’s psychological state of risk

acceptance, based upon the positive expectations of the intentions or behaviours of an online

merchant (Rousseau et al, 1998). Several studies have suggested that brand trust is a critical

factor in stimulating purchases over the internet (Quelch and Klein, 1996; Corbitt et al,

2003). Many previous papers have taken a look into the root causes that can shape this type

of a relationship that is based solely and mainly on trust, such as Dayal et al. (1999) Who

proposes in his paper that there are many factors that need to be fulfilled in order to achieve

online trust such as hello but not limited to cyber security and business legitimacy.

2.2.3.1 Relationship with Brand Reputation

In a time where marketing agency have developed sophisticated tools to portray

product and services and the best appearance and blue route any inconveniences, consumers

can only rely on the brand image that offer the whole experience rather than cingular service

and in order to identify the level of risk customers can only refer to the brand reputation

which includes pass reviews and public image (Moorman, Zaltman, and Deshpande, 1992).
2.3 Research Theory
SERVQUAL and SOR models are employed in order to survey this study. Since

Mehrabian and Russell (1974) suggested that environmental stimuli (S) lead to an emotional

reaction (O) that evokes behavioural responses (R), the model has been applied in various

retail settings to explain the consumer decision making process (Richard et al., 2009). Brand

reputation is immediately related to the service quality what if the quality is good enough it

will impact the company reputation and by consequence it will attract more customers an

retain the already existing customer base (Hosseini, 2017)

2.4 Research Framework

Based on previous literatures and studies, a proposed research framework is designed as

below

Word of Mouth

Service Quality Brand Reputation

Consumer Trust

Statistical model

According to the existing literature the statistical model in this study can be expressedas

follows:

y = β1 WOM + β2 SQ + β3 CT
where y = Brand Reputation, WOM= Word-Of-Mouth, SQ = Service Quality, CT =

Consumer Trust

Chapter III
3.1 Methodology
3.2 Research Philosophy
This paper will implement “positivism philosophy” in order to attain credible data

from respondents answers (Saunders, 2012). Thus, information derived from sensory

experience, interpreted through reason and logic, forms the exclusive source of factors

influencing brand reputation of e-commerce companies.

3.3 Research Method

According to Saunders, et al. (2012), research approaches are mainly based on the

research philosophies, whereby the deductive approach is commonly used by researchers

with traditional natural scientific views (positivism). So, this research paper can be

considered as expletory research paper with deduction a theory and hypothesis (or

hypotheses) are developed and a research strategy designed to test the hypothesis.

3.4 Research Strategy and Choice

In his paper Sanders has associated the strategy used in the survey with a deductive

approach. Thus, online and paper-based survey questionnaire will be employed in order to get
answers for research questions and develop data for research objectives. Quantitative data

collection technique is used in this research since the data collected will be analyzed and

output in a numerical format (Sekaran, U. and Bougie, R., 2010).

3.5 Data Collection

Self-administered questionnaire will be developed to collect primary data.

Questionnaire will be distributed to 150 students in the form of either online google format or

paper-based in order to get their answers for questions regarding variables and also regarding

their demographic information.

3.6 Time Horizon

This paper is taking a closer look into the rapport that links different variables. It’s

purpose is to discover the connection at a given moment, therefore a “cross-sectional”

approach is used. This approach is applied once through its survey strategy and investigates a

specific incident at a given moment of time (Saunders, 2012)

3.7 Research Instrument

During the survey, people are categorized depending on several characteristics. From

demographics to different dependant and independent variables. The survey structure and

questions were acquired from separate sources where on the other hand the questionnaire

consisted of planned methodology using a “Likert-type scales” since it is very suitable and

proved itself worthy when used in self-administered tools in previous academic papers (Hair,

Bush and Ortinau, 2004).

3.8 Sampling Technique

 Depending on the type of reaserch done in this paper, and by comparing to previous

attemopts we have cocluded that a “Non-probability” sample method is the most convenient

to use (Saunders et al., 2012). Our chosen sample will include mainly university students

based on the method used by “Morgan and Krejcie”. This sample pool will be of a small size

since the targeted amount of people won’t exceed 150 (based on Krejcie and Morgan).

3.9 Data Analysis and Processing

Descriptive analysis, Scale measurements, Reliability test (Cronbach’s Alpha) and

Inferential analysis are analysed using SPSS software (which also tests Pearson Correlation

Analysis and Multiple Regression Analysis).

3.10 Ethical Consideration

During this paper, we have encountered numerous ethical issues that have presented

themselves especially issues related to the data retention protocols and its privacy. Users have

the right to know the type and amount of data shared and used by the companies and have full

access to their rules and regulations that should go over with details on how the data is

processed. Furthermore, customers retain the right to refuse and abstain from sharing their

data and maintain the discretion of personal data that shall be provided and adhered to by the

organization. (Saunders et al., 2012).

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