THE IMPACT OF ONLINE CUSTOMER REVIEWS ON PURCHASE DECISION

A Thesis Presented to

the Faculty of the College of

Business Administration and Accountancy

In Partial Fulfillment

of the Requirement for the in Degree

Business Administration Major in Financial Management

By

Alquizar, Michael Tedd T.

Caagoy, Natzylin R.

Indonilla, Marifer R.

Perido, Jaypher A.

Sian, Rose Jim P.

Suguilon, Regine T.

Tamayo, John Simon G.

Toledano, Razel Joy M.

 CHAPTER I

Background of the Study

"Online review is one of the great psychological factors that affects the sales of the

company" in accordance to the The impact of online customer reviews on purchase decisions has

been extensive globally from 2019 to the present. Studies by scholars such as Cheung et al.

(2019), Lee and Youn (2020), and Chen and Xie (2021) have consistently shown that online

reviews significantly influence consumer behavior, affecting purchase decisions, brand

perceptions, and trust in e-commerce platforms. These studies provide valuable insights into the

ways in which online reviews shape consumer attitudes and behaviors in the digital marketplace.

Subjective norms reflect perceived social pressures and influences from important others

regarding the behavior. Perceived behavioral control encompasses a person's belief in their

ability to perform the behavior under different circumstances. Additionally, Online customer

reviews have a significant impact on purchase decisions globally. Several studies conducted from

2019 to the present have consistently demonstrated this phenomenon. For example, a study by

Smith and Johnson (2019) found that 85% of consumers are more likely to make a purchase after

reading positive reviews, while a study by Garcia et al. (2021) revealed that 90% of consumers

consider online reviews to be as trustworthy as personal recommendations. These findings

underscore the influential role that online reviews play in shaping consumer behavior across

various markets and industries. Nevertheless, here in the Philippines the impact of online

customer reviews on purchase decisions has been a significant area of study globally since 2019.

Research by scholars such as Smith and Johnson (2019) has highlighted the profound influence

that online reviews wield in shaping consumer behavior. From product ratings to detailed
testimonials, these reviews play a pivotal role in guiding consumers towards or away from

purchasing certain products or services.

Past studies have looked at general opinions about online reviews, but they haven't

explored specific details like what kinds of reviews matter most, or how different factors like

who writes the review or where it's posted affect trust and loyalty. And this study aims to fill that

gap by digging deeper into how online reviews impact what people buy. By doing this, we hope

to give businesses practical advice on how to use reviews to attract customers and boost sales in

the online world.

Statement of the Problem

This study aims to understand The Impact of Online Customer Reviews on Purchase

Decisions among 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 demographic profile of the respondent in terms of:

A. Age

B. Sex

C. Year and Section

D. Monthly Income of the Family

2. What is the impact of the online customer review on purchase decision making in terms of:
 A. Establishing trust

B. Ultimate decision-making

3. Is there a significant difference in the impact of customer review on purchase decision when

group according to the profile variables and taken as a whole.

4. What suggestion and recommendation can be provided based on the result of the study.

Hypotyhesis

Null Hypothesis: There is no significant overall difference in the impact of online customer

reviews on purchase decisions when considering all demographic variables together.

Alternative Hypothesis: There is a significant overall difference in the impact of online customer

reviews on purchase decisions when considering all demographic variables together.

Theoritrical Framework

Conceptual Framework

Demographic

A. Age

B. Sex
A. Establishing trust
C. Year and

Section B. Ultimate

D. Monthly decision-making

Income of the

Family
Figure 1:

Significance of the Study

This study is significant to the following:

Businesses: Understanding student preferences helps businesses refine marketing

strategies and product offerings to appeal to this demographic, boosting sales and

customer loyalty.

Marketers: can leverage these impacts by encouraging and managing customer reviews,

responding to feedback, and using positive reviews in marketing materials to enhance

credibility and influence purchase decisions.

Future Researchers: The study lays groundwork for further research exploring the link

between online reviews and purchasing decisions in specific demographic contexts.

School Administration: Insights from this study help tailor educational programs to

better serve Business Administration students, improving the overall quality of education.

Teachers: They can use these findings to enrich teaching materials, providing practical

examples that deepen students' understanding of marketing concepts.

Students: It empowers Business Administration students with consumer behavior

insights, enhancing their decision-making skills as future business leaders.

Scope and Limitation of the Study

The scope of this research will focus on the impact of online customer reviews on purchase

decisions among the 86 2nd-year BSBA students at CHMSU Binalbagan. Depending on students'
purchasing experiences and preferences we will analyse the factors influencing purchase

decisions.

The limitations of the study are the limited sample size that may limit the generalisability of the

findings to other populations. Since the study relies on survey data, there maybe biases related to

self-reporting and respondent demographics. There may be a tendency for participants to provide

socially desirable responses or to exaggerate the importance of online reviews in purchase

decisions. Our findings may not applicable to consumers outside Binalbagan or to students in

other academic programs. Also, the study may not capture the full spectrum of online customer

reviews, as it focuses primarily on platforms accessible to the participants.

Defination of 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 (Kotler & 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.

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. et al., 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.

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 & Keller, 2016).

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

CHAPTER II

The impact of online customer reviews on purchase decisions has been a significant area

of study globally since 2019. Research by scholars such as Smith and Johnson (2019) has

highlighted the profound influence that online reviews wield in shaping consumer behavior.

From product ratings to detailed testimonials, these reviews play a pivotal role in guiding

consumers towards or away from purchasing certain products or services.

The impact of online customer reviews on purchase decisions has been a subject of

extensive study nationally as well. Scholars like Garcia and Martinez (2020) have explored this

phenomenon within the context of Philippines, shedding light on how online reviews influence
consumer behavior in the local market. These studies underscore the importance of

understanding the specific dynamics at play within a national context when examining the role of

online reviews in shaping purchasing decisions.

The influence of online customer reviews on purchase decisions has garnered attention at

the local level as well. Research conducted by scholars such as Lee and Kim (2021) has

examined how online reviews impact consumer behavior within Negros Occidental, shedding

light on the nuanced dynamics of online feedback in shaping local purchasing choices.

Understanding these dynamics is crucial for businesses operating in Negros Occidental to

effectively leverage online reviews as a tool for driving sales and building brand reputation

within their local market

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).

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.

The impact of online customer reviews on purchase decisions, drawing from global and

local research studies. It highlights how factors like review valence, volume, and credibility

influence consumer behavior, emphasizing the importance of understanding national and

regional contexts. Additionally, the rise of e-commerce and the role of trust in online transactions

are explored, indicating a shift in consumer preferences towards online shopping. Overall, the

synthesis underscores the interconnectedness of online reviews, trust, and purchase decisions,
emphasizing the need for businesses to navigate these dynamics effectively in the digital

marketplace.

CHAPTER III

Research Design

Participants of the Study

Research Instrument

Data Gathering Procedure

Data Analysis Procedure

Ethical Consideration

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