1. LOG O Word-of-Mouse vs Word-of- Mouth: The Effects of the Internet on Consumer's Pre-purchase Information-search Activities. Instructor: Dr. Pi-Ying Teresa Hsu Presenter: Stan Chung Date: April. 27, 2009

2. Martin, D., & Lomax, W. (2001). Word-of-mouse vs word-of- mouth: The effects of the internet on consumer's pre- purchase information-search activities. Occasional Paper Series, 45. Retrieved March 29, 2009 from http://business.kingston.ac.uk/papers/opres45.pdf 2

3. Contents I.Introduction II.Research Questions III.Methodology IV.Results V.Reflection 3

4. Introduction This paper is aim to compare Word-of-Mouth and Word-of-Mouse towards consumer pre-purchase information search. 4

5. Introduction Attempt to buy Options Perceive risk, Anxious Minimize the risk Information seeking 5

6. Introduction (Cox, 1967) 6 Information sources InternalThe knowledge a consumer already has. ExternalMarketer dominated or personal and interpersonal information.

7. Introduction Word-of-mouth is the most influential factor in consumers’ choice. (Engel, Blackwell & Kegerreis, 1969; Herr et al., 1991) 7

8. Introduction Word-of-mouth was the most important risk reducing source. (Cox, 1963; Lutz and Reilly, 1973) 8

9. Research Questions 1.Do consumers use Internet based sources as part of their pre- purchase information search strategies? 2.Which of the Internet based sources (marketer-controlled or consumer-controlled) are more popular in pre-purchase information searches? 3.Does the use of Internet information sources depend on the products or services being purchased? 9

10. Research Questions 4.How much confidence do consumers have in Internet sources relative to other sources? 5.Is this confidence dependant on the purchase being considered? 6.Is use of an Internet based source indicative of confidence in that source? 10

11. Methodology High Risk PurchasesMedium Risk PurchasesLow Risk Purchases Personal income tax advice Smoke detector/ alarmPocket camera Professional interior decoration advice New car exhaust- parts and fitting Tennis racquet Car engine tuning serviceCar interior valeting serviceSmall vacuum cleaner Eye testMeal in a fine restaurantBarbequeue set Dental check-upTV and video rentalRaincoat 11 (Murray, 1991) The level of perceived risk is a key driver in the use of word-of-mouth as part of a consumer’s overall information search strategy. (Lutz & Reilly, 1973)

12. Methodology SamplingSnowball Participant High risk purchase 82 Medium risk purchase 99 Low risk purchase 66 Total 247 Age21-30 (70%) GenderMore than 60% were female MethodQuestionnaire (Likert 7-point scale) 1 indicating “most likely to use” and “most confidence” 7 indicating “most unlikely to use” and “most not confidence” 12

13. Results 1.Do consumers use the Internet as a source of pre- purchase information?  Yes. (only 2% said no) 2.Which Internet based information sources (marketer controlled or non-marketer controlled) are more popular in pre-purchase information sources?  E-mail. 13

14. Results 3.Does the use of Internet based sources depend on the products and services purchased?  No difference. 4.How much confidence do consumers have in Internet sources relative to other sources?  Consumers have significantly less confidence in Internet sources of pre-purchase information. 14

15. Results 5.Is this confidence dependant on the purchase being considered?  All sources were found to exhibit a significant relationship between use and confidence. 6.Is use of an Internet based source indicative of confidence in that source?  Yes. Confidence in Internet WOM was higher in high-risk purchases. 15

16. Results Word-of-Mouth sources were the most popular of the potential information sources, particularly in higher risk purchase situations. Internet sources were less popular than other sources. Internet WOM sources were less popular than other WOM sources. The use of WOM increased as perceived risk in a purchase increased. Confidence was highest in conventional WOM sources such as asking friends, family and other customers. 16

17. Results Confidence was lowest in the Internet sources. Confidence in email was higher than the other Internet sources. Confidence in company website information was less than its actual use suggests. Confidence in Internet WOM was higher in high-risk purchases. Confidence in conventional WOM was higher in high-risk situations. 17

18. Reflection No detailed statistical data. Some of the results would probably be different in nowadays. 18

19. Thanks for your listening! 19