Chapter I

Introduction

This chapter of the study explain the introduction of the study. It includes the background of

the study, statement of the problem, theoretical background, and conceptual framework, scope of

the study, significance of the study and the definition of terms.

Background of the Study

Online customer reviews play a crucial role in influencing purchase decisions. Studies

have shown that customer reviews provide diagnostic value throughout the purchase decision

process (Mudambi & Schuff, 2010). While many studies focus on the direct impact of online

reviews on purchase decisions, some also consider the mediating effect of perceived product

quality on these decisions (Wang et al., 2019). Additionally, research indicates that utilizing

online reviews for product recommendations can enhance customer satisfaction and lead to better

purchase decisions (Hu et al., 2021).

In the realm of online marketing, influencer marketing and online customer reviews have

been found to significantly impact online purchase decisions (Arief, 2023). Furthermore, the

influence of online customer reviews on trust and its subsequent effect on purchase decisions

have been studied, highlighting the interconnectedness of these factors (Fahrozi et al., 2022; ,

Rahayu & Oktafani, 2021). Moreover, digital marketing, influencer marketing, and online

customer reviews collectively have a significant effect on online purchasing decisions (Putri &

Marlien, 2022; , Wilis & Faik, 2022).

 The impact of online reviews on purchase decisions is further emphasized by studies

showing that online customer reviews positively affect purchase decisions (Aditya et al., 2022; ,

Astuti & Susila, 2022; , Suryawan et al., 2022). These reviews serve as a means for customers to

gather information that influences their purchasing choices (Suryawan et al., 2022). Moreover,

the credibility of online reviews plays a vital role in shaping customer engagement and purchase

intentions (Shaheen et al., 2019).

Overall, online customer reviews are instrumental in shaping consumer behavior and

purchase decisions. They not only provide valuable information but also influence trust,

satisfaction, and ultimately impact the choices customers make when deciding to purchase a

product or service.

Statement of the Problem

This study aims to explore the Effectiveness of Online Customer Reviews on purchase

decisions among 2nd Year Business Administration Students at Carlos Hilado Memorial State

University-Binalbagan, School Year 2023-2024.

Specifically, the study seeks to address the following questions:

1. What is the demographic profile of the 2nd BSBA students in terms of :

a. Age

b. Sex

c. Section

d. Socio-Economic Status of the Family

2. What is the level of effectiveness of online customer reviews on purchase decisions in

terms of:
 a. Peer-Influence

b. Recommendation

c. Online Customer Review Rating

3. Is there a significant correlation between the online customer reviews and demographic

factors, needs, and desires?

In summary, this study aims to understand the role of Online Customer Reviews on Purchase

Decisoins among Business Administration students and identify key factors influencing their

purchasing decisions.

Hypotheses

Null Hypothesis: There is no significant relationship between online customer reviews and

purchase decisions, when considered collectively and categorized based on demographics, needs,

and desires.

Alternative Hypothesis: There is a significant relationship between online customer reviews and

purchase decisions, when analyzed collectively and categorized according to demographics,

needs, and desires.

Theoretical Framework

Dual process theories divide the realm of mental processes into two general categories depending

on whether they operate automatically or in a controlled fashion. This chapter provides an

overview of dual process theories in social psychology, focusing on their historical and

conceptual developments. Identifying three general categories of dual process theories, the
 chapter distinguishes between domain-specific theories that focus on particular phenomena,

generalized dual process theories that identify domain-independent principles underlying various

kinds of phenomena, and formalized dual process theories that quantify the joint contributions of

automatic and controlled processes to responses within a single task. The chapter also discusses

critical arguments against each type of dual process theorizing, which are integrated in a general

outlook on future directions. (PsycInfo Database Record (c) 2020 APA, all rights reserved)

Conceptual Framework

Dependent Variable Independent Variable

Demographics: Input

1. Age Attitude towards Online

2. Sex Shopping

3. Section Purchase
Purchasing Online
4. Socio-Economic Status of
Decision Making Decesion
the Family
Intention to Shop
Websites Quality (facebook,

shopee, lazada and tiktok)

Figure 1: presents a conceptual paradigm between the dependent “” and independent “”

variable
Significance of the Study

This research aims to assess the Effectiveness of Online Customer Reviews on Purchase

Decision among Business Administration Students at Carlos Hilado Memorial State University,

Binalbagan. It intends to achieve several objectives:

1. Students: The study seeks to raise awareness among students about how effective online

costumer’s review affects purchase decision.

2. School: It aims to provide insights for the institution to understand the effectiveness of

online customer’s review on purchase decision.

3. Marketers: This research is valuable for marketers as tool to utilized and assess the

effectiveness of online customer’s review on purchase decision.

4. Researchers: The study aims to contribute to existing literature by providing insights for

future researchers interested in delving into the effectiveness of online customer’s review

on purchase decision.

5. Future Researchers: It intends to offer comprehensive information for future researchers

to build upon and apply to similar research topics.

Scope and Limitation of the Study

This study focuses solely on the responses of 2 nd year BSBA students regarding the effectiveness

of online customer review on purchase decisions. It specifically analyzes the effectiveness of

online customer reviews on purchase decision. Geographically, the study is limited to consumers

surveyed at Carlos Hilado Memorial State University-Binalbagan Campus.

Definitions and Terms

To ensure clarity in comprehending the study, the subsequent terms are defined both

conceptually and operationally:

Business Administration Students

Conceptually, they learn business principles while strengthening their leadership skills,

and they have a flexible curriculum that allows them to pursue a variety of careers (Gurbuz,

2020).

Operationally, Business Administration Students are individuals actively enrolled in a

business administration program at Carlos Hilado Memorial State University-Binalbagan. These

students will serve as the respondents for the study, providing data and insights relevant to the

research objectives.

Consumer Buying Behavior

Conceptually, it refers to the buying behavior of individuals and households that buy

goods for personal use and consumption (Philip Kotler, Gary Armstrong, 2012).

Operationally, it refers to a measurable and observable description of behaviors, actions,

or indicators that can be utilized to identify and understand how consumers make purchasing

decisions.

Demographic

Conceptually, the description of a population according to selected characteristics such as

age, gender, ethnicity, income, and occupation (American Marketing Association, 2021)
 Operationally, it pertains to a collection of quantifiable and observable attributes or

factors utilized for categorizing and comprehending populations or cohorts of individuals.

Effectiveness of Online Customer Reviews

Conceptually, the impact or influence of online customer reviews on consumers'

perceptions, attitudes, and behaviors towards a product or service. (Chevalier, J., & Mayzlin, D.,

2006).

Operationally, the degree to which online customer reviews influence consumers'

purchase decisions, measured by analyzing metrics such as conversion rates, sales revenue, or

changes in consumer sentiment before and after exposure to reviews.

Online Customer Review

Conceptually, Online Customer Review refers to a user-generated evaluation or critique

of products, services, or experiences, typically posted on digital platforms accessible via the

internet. These reviews encompass written feedback, ratings, and occasionally multimedia

elements like images or videos. Online reviews serve as a form of electronic word-of-mouth

communication, enabling individuals to share their subjective opinions and experiences with

others in an online setting (Cheung & Thadani, 2012; Filieri, 2015; Xie et al., 2011).

Operationally, Online reviews are identified from various digital platforms such as e-

commerce websites

Purchase Decision
Conceptually, the cognitive process through which consumers evaluate alternatives and make

choices regarding the acquisition of a product or service. (Engel, J. F., Blackwell, R. D., &

Miniard, P. W. 1995)

Operationally, the actual act of selecting and buying a product or service, measured by tracking

consumer behavior such as completed transactions, basket size, or frequency of purchase.

Informativeness

Conceptually, communicative success depends on the quantity and quality of information

conveyed by a speaker and the efficiency of transmission. (Nicholas & Brookshire, 1993)

Operationally, In practical terms, the quantity and quality of information found within a

website.

Invasiveness

Conceptually, in the context of digital advertising, invasiveness refers to the degree to

which an advertisement disrupts the user's online experience and privacy. Invasive digital

advertisements are those that interfere with the user's ability to browse the internet or use an app

comfortably, often by blocking content or causing unexpected interruptions (Böck et al., 2016).

Operationally, the impact and disruption caused by aonliine customer review on a

consumer's online experience are typically measured by factors such as how often they appear,

where they're placed, how intrusive they are, and how relevant they are to the user.

Satisfaction
 Conceptually, it is "a person’s feeling of pleasure or disappointment resulting from

comparing a product’s perceived performance (or outcome) in relation to his or her expectations

(Kotler and Keller, 2016).

Operationally, anything that provides satisfaction, enjoyment, or a sense of fulfillment.

Security

Conceptually, it refers to "a state of being free from danger or threat" (Crawford and

Hutchinson 2016).

Operationally, this entails putting into action methods to secure consumer information,

prevent fraudulent behavior, and guarantee a secure and reliable online advertising environment.
 Chapter II

Review of Related Literature

This chapter presents a Review of Related Literature that will serve as a guide to

distinguish the Consumer Buying Behavior of BSBA students of CHMSU-Binalbagan. This

chapter also represents both local and foreign sources that are related to the study. The purpose

of this chapter is to review related literature on Measuring Effectiveness of Online Customer

Reviews on Purchase Decision.

Foreign Literature

This study conceptualizes, operationalizes, and identifies the drivers of online product

review (OPR) relevance and examines its relative effect on OPR impact compared to review

credibility. In contrast to previous studies, this study is the first to conceptualize review

credibility as a distinct construct from reviewer expertise and trustworthiness comprising a

cognitive-affective dimension (perceptions) and a behavioral dimension (likelihood to act).

Results show that review relevance contributes significantly to explaining OPR impact and that

review relevance and review credibility (drivers of OPR impact) provide a significantly better

fit to the empirical data than review credibility alone. In fact, review relevance is almost an

equally strong driver of OPR impact as review credibility. However, the relationships between

review credibility and its two hypothesized drivers—reviewer trustworthiness and reviewer

expertise—are mixed. While a significant positive relationship is found between credibility and

trustworthiness, as expected, a significant negative relationship is found between credibility

and expertise. (Alhassan G Mumuni et. al, 2020)

Contributing to the literature on online review variance, we investigate consumer

adoption intentions in three studies looking at various perspectives regarding new products.

Study 1 demonstrates that really new products (RNPs) with low review variance lead to higher

adoption intentions, while incrementally new products (INPs) with high review variance lead

to higher adoption intentions. Study 2 shows that risk perceptions and uniqueness perceptions

are the mechanisms underlying the interaction effect between product newness and online

review variance. Study 3 considers cultural values to explore the premise’s boundary, finding

that indulgent consumers tend to prefer INPs with high variance reviews while restrained

consumers are more likely to adopt RNPs with low variance. These findings offer theoretical

and managerial implications for managing the online review variance of new products.

(Yuanyuan Wu, et al.,2021)

E-commerce has grown substantially over the past years and has become increasingly

important in our daily life, especially under the influence of COVID-19 recently (Hasanat et

al., 2020). In response to these trends, a large number of studies (Floh et al., 2013; Lackermair
et al., 2013; Kang et al., 2020; Chen and Ku, 2021) have investigated the effects of online

reviews on purchasing intention.

Online Product Review

Several studies have reported on the influence of online reviews, in particular on

purchasing decisions in recent times (Zhang et al., 2014; Zhong-Gang et al., 2015; Ruiz-Mafe

et al., 2018; Von Helversen et al., 2018; Guo et al., 2020; Kang et al., 2020; Wu et al., 2021).

Likewise, Boardman and Mccormick (2021) found that consumer attention and

behavior differ across web pages throughout the shopping journey depending on its content,

function, and consumer’s goal. Furthermore, Guo et al. (2020) showed that pleasant online

customer reviews lead to a higher purchase likelihood compared to unpleasant ones. They also

found that perceived credibility and perceived diagnosticity have a significant influence on

purchase decisions, but only in the context of unpleasant online customer reviews. These

studies suggest that online product reviews will influence consumer behavior but the overall

effect will be influenced by many factors.

In addition, studies have considered broader online product information (OPI),

comprising both online reviews and vendor-supplied product information (VSPI), and have

reported on different attempts to understand the various ways in which OPI influences

consumers. For example, Kang et al. (2020) showed that VSPI adoption affected online review

adoption. Lately, Chen and Ku (2021) found a positive relationship between diversified online

review websites as accelerators for online impulsive buying. Furthermore, some studies have

reported on other aspects of online product reviews, including the impact of online reviews on

product satisfaction (Changchit and Klaus, 2020), relative effects of review credibility, and
review relevance on overall online product review impact (Mumuni et al., 2020), functions of

reviewer’s gender, reputation and emotion on the credibility of negative online product reviews

(Craciun and Moore, 2019) and influence of vendor cues like the brand reputation on

purchasing intention (Kaur et al., 2017). Recently, an investigation into the impact of online

review variance of new products on consumer adoption intentions showed that product

newness and review variance interact to impinge on consumers’ adoption intentions (Wu et al.,

2021). In particular, indulgent consumers tend to prefer incrementally new products (INPs)

with high variance reviews while restrained consumers are more likely to adopt new products

(RNPs) with low variance. Guo et al. (2020) found pleasant online customer reviews to lead to

a higher purchase likelihood than unpleasant ones. This confirms hypothesis one from another

side. The product selected in our experiment is a mobile phone, which is not only a utilitarian

product but also a hedonic one. It can be used to make a phone call or watch videos, depending

on the user’s demands. Consumer attention and different behavior depending on website

content, functions and consumers goals (Boardman and McCormick, 2019). Measuring the

attention to the website and time spent on each purchasing task in different product categories

shows that shoppers attend to more areas of the website for purposes of website exploration

than for performing purchase tasks. The most complex and time-consuming task for shoppers

is the assessment of purchase options (Cortinas et al., 2019). Several studies have investigated

fashion retail websites using the eye-tracking method and addressed various research

questions, including how consumers interact with product presentation features and how

consumers use smartphones for fashion shopping (Tupikovskaja-Omovie and Tyler, 2021). Yet,

these studies considered users without consideration of user categories, particularly gender.

Since this research is to explore consumers’ decision-making behavior and the effects of
gender on visual attention, the eye-tracking approach was employed as part of the overall

approach of this research project.

Online reviews of products, as a form of free sales assistance, play an important role in

consumers’ purchasing decisions. Many scholars have studied the effects of online review

valence and volume on product sales (Chen et al., 2022, Li et al., 2019, Blal and Sturman,

2014).

Local Literature

The advancement of information technology is moving so quickly, and one example is

the existence of the internet, which has a big impact on many areas of life, including the

corporate world.. Consumers are now more interested in online shopping activities than offline,

this is an opportunity for companies to attract consumers by creating an online shopping system

or often called E-commerce. E-commerce is a phrase that explicitly refers to commercial

transactions or

exchanges that take place online (Sitinjak & Silvia, 2022). Because there are so many benefits to

buying online, consumers have an easier time doing so thanks to ecommerce's rapid rise.ine,

namely consumers can search and view product catalogs more effectively, consumers also do

not need to spend time visiting stores so that it is more practical, and can be more cost efficient

because it can be accessed anywhere and anytime. Then when shopping in stores online

consumers can compare prices and quality 24 hours through e-commerce. With the current rapid

development of e-commerce, the prediction is that growth will continue to occur in the next few

years. (Fisca Ardi Prasetiawati et. al., 2023)

Online Customer Review

 Online customer reviews are a tool or media enabling consumers to examine reviews

provided by other customers regarding experiences in purchasing or using items, services at the

company, according to Jamil & Purwanto (2022). Meanwhile, according to Lackemair in

Rahmawati (2021)

online customer review is an assessment of a product or company given by consumers which can

be positive or negative, the assessment is made according to the experience of the person doing

the review. According to Rinaja et al., (2022) online customer review can be measured using

indicators, namely: (1) Perverse Usefulness; (2) Reputable Sources; (3) Strong Arguments; (4)

Value; and (5) Review Volume

Trust

According to Nurhidayat & Marsudi (2022) Trust is a belief in a particular party to carry

out a transaction relationship based on a belief that someone who is trusted will fulfill all his

obligations whether it is expected or not. Meanwhile, according to Schiffman & Kanuk (2008:

356) in Resa & Andjarwati (2019) argue that trust is a statement that exists in the mind or

verbally that is able to describe a person's knowledge and judgment of a thing or idea. According

to Rafidah & Djawoto (2017) in Nitta & Wardhani (2022) trust can be measured using indicators,

namely: (1) Reliability; (2) Honesty; (3) Care; (4) Credibility; (5) Competence.

Purchase Decision

Purchasing decisions are the last stage in purchases made by consumers. At this stage,

consumers are faced with several choices so that consumers will make decisions to choose

products that are in accordance with what consumers need (Napitupulu & Supriyono, 2023).

Then according to Nurhidayat & Marsudi (2022) purchasing decisions mean choosing two or
more alternative choices according to certain interests and making choices that are considered

profitable.

According to Thomson (2013) in Amin & Hendra (2020) there are 4 indicators in

purchasing decisions, namely: (1) According to needs; (2) Has benefits; (3) Accuracy in buying a

product; (4) Repeat purchases. Online Customer Review and Purchase Decision Online customer

review (OCR), as defined by Jamil & Purwanto (2022), is a tool or media that allows customers

to

read feedback about their experiences using the company's goods and services. Then, in

accordance with Wardhani et al. (2020), an online customer review (OCR) is a review provided

by consumers related to information from an assessment of a product from various aspects. With

this information, consumers can obtain the quality of the product they desire from reviews and

experiences written by consumers who have purchased the product. Because they offer broad

product information as well as positive or negative product attributes, online customer reviews

are utilized as a foundation for decision-making before making a purchase. This material is

typically provided by buyers, so with numerous reviews it will give prospective buyers a lot of

information. For this reason, online customer reviews can make it simpler for potential

customers to decide whether or not to purchase a product (Saskiana, 2021). This is supported by

Ruwaida & Aqilah's (2023) opinion, which claims that online customer reviews play a

significant role in influencing purchasing decisions. According to research by Sitinjak & Silvia

(2022), Shopee customers' shopping decisions are significantly influenced by online customer

reviews. Online consumer reviews have a positive and large impact on online shopping decisions

at Tokopedia, according to research by Nurhidayat & Marsudi (2022).

Trust and Purchasing Decision

 Trust is one of the vital reasons that encourages someone to make an online purchase

with low risk considerations.According to Nurhidayat & Marsudi (2022) Trust is a belief in a

particular party to carry out a transaction relationship based on a belief that someone who is

trusted will fulfill all his obligations whether it is expected or not. According to Ling et al.,

(2010) in Amin & Hendra (2020) argue that trust is needed when making online purchases and

when someone is going to make an online transaction, the first thing they consider is whether the

seller and the site they visit are safe and trustworthy or not. Because there is no face-to-face

interaction, the buyer's confidence in the seller and the online marketplace takes center stage.

According to earlier studies by Wijaya & Kempa (2018) and Kurniawati (2022), consumers of

Lazada make major judgments based on their level of trust.

Chapter III

Methodology

This chapter presents a description of the research process. This provides information
concerning the method that was used in undertaking the research. It justifies the data gathering
approaches and data analysis.

Research Design

This study employs a research design that combines quantitative descriptive methods
with stratified random sampling to investigate the influence of digital advertisements on
consumer buying behavior. The study adopted a descriptive cross-sectional survey design since it
involves an in-depth explanation of a situation (Siedlecki, 2020). Pragmatism philosophical
approach was adopted which denotes that knowledge emerges from a range of specific outcomes,
which is not necessarily shaped by antecedence (Cherryholmes, 1992;Kaushik & Walsh, 2019).
Vertical integration had a positive effect on performance of star rated hotels in the Kenyan Coast.
These findings concur with Tarver (2022) who noted that companies that make the choice of
vertical integration strengthen their supply chains, reduce costs of production, capture upstream
Journal of Hospitality and Tourism ISSN 2789-7052 (Online) Vol.3, Issue 3, pp 75 - 92,2023
www.ajpojournals.org 87 and downstream profits and access new distribution channels.

Participants in the Study

The target population for this study is defined as including the 2nd BSBA students of
CHMSU-Binalbagan.

Research Instrument

The instrument used in gathering the data is a researcher-made questionnaire. The

questionnaire consists of four parts. The first part of the questionnaire will gather the
participants’ demographic profile. The second part will determine the level of effectiveness of
online customer reviews on purchase decisions. The third part will determine the impact of
online customer reviews on purchase decisions in terms of peer-influence, recommendation and
online customer review rating when taken collectively. The fourth and last part will be used to
determine the factors considered by business administration students when buying through
online platforms. The questionnaire consists of 35 questions to be answered by the participants.

Data Gathering Procedure

The researchers will draft a request letter for the intended participants. Before
distribution, the subject's professor will evaluate the questionnaire, which will be a rating scale.
A survey will be used to conduct the research. Participants in this study will be asked for their
consent and will not be forced to participate if they refuse. The researchers will first explain why
their response to the study is so important. The researchers will explain some concepts to the
respondents so that they can complete the questionnaire fully aware of their role as the subject of
the study. The researchers will ask the respondents to answer honestly. The researchers will
gather and tally the data when the respondents complete the questionnaire. The researchers will
consult with a statistician to determine the best statistical methods to use and to interpret the
data. The researchers will come up with conclusions and make recommendations for the study.

Data Analysis Procedure

The following statistical tools were used based on the objectives that were set forth:

For problem one, which aims to identify the level of effectiveness of online customer
reviews on purchase decisions when taken collectively and grouped according to demographic,
needs, and wants, the mean and standard deviation were used.

For problem two, which aims to identify the influence the impact of online customer
reviews on purchase decisions in terms of peer-influence, recommendation and online customer
review rating when taken collectively, the mean and standard deviation were used.

Mean Score Interpretative Category

Range

4.50 – 5.00 Very High

3.50 – 4.49 High

2.50 – 3.49 Average

1.50 – 2.49 Low

1.00 – 1.49 Very Low

For problem three, which aims to identify the factors that consumers consider when
buying, frequency and percentage were used.

For problem four, which aims to identify if there is a significant relationship between the
level of effectiveness of online customer reviews on purchase decisions when they are taken
collectively and grouped according to demographic, needs, and wants, the Mann-Whitney U test,
Kruskal-Wallis, and Pairwise Comparisons were used.
Ethical Considerations

The current study was subject to certain ethical issues. As it was mentioned earlier, all
participants reported their written acceptance regarding their participation in the research through
a signed Consent and Briefing Letter. At the same time, sample members were asked to sign a
Debriefing and Withdrawal Letter. The aim of both letters was to reassure participants that their
participation in the research is voluntary and that they are free to withdraw from it at any point
and for any reason.

Next to this, participants were fully informed regarding the objectives of the study, and
they were reassured that their answers were treated as confidential and used only for academic
purposes and only for the purposes of the research. Except for the above, participants were not
harmed or abused, both physically and psychologically, during the conduct of the research. In
contrast, the researcher attempted to create and maintain a climate of comfort.

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