The Influence of Online Reputation

and Reviews in Online Marketing:

The Malaysian Scenario
Chan Kah Chi; IIC University of Technology, Cambodia
Leow Chee Seng; IIC University of Technology Cambodia

Introduction

ABSTRACT

Online shopping is becoming the latest trend

in this current technology-based generation
and as such, has become a manifestation of
the latest lifestyle. From the latest study by
the International Data Corporation, Malaysia 2011, almost 50% of Malaysias internet
users were e-consumers in 2010 and this
percentage was forecasted to increase to
55% in 2012. Based on another study by the
Malaysian Crunch, Malaysians spent RM1.8
billion towards online shopping in 2010 and
the figure increased to an estimation of RM5
billion in 2014. This shows that Malaysians
are moving away from the traditional way of
shopping and increasingly moving towards
online shopping. Therefore, it is interesting
to understand what influences the Malaysian consumers purchasing intention which
may then guide the marketing approach of
companies positioning their products and
services online. The purpose of this study is
to investigate the importance of online reputation management on customer purchase
intention online. For the purpose of this
study, a research model was developed. This
model suggests that online reputation management has a significant impact on online
purchasing intention. According to this model, online purchasing intention also mediates
effects of other independent variables such
as product descriptions, price, and website.
Keywords: online reviews, online reputation, product
descriptions, price, website, consumer purchasing intention, marketing.

Journal of the Consumers Research and Resource Centre

In the era of globalization and technology, business and market operations have changed drastically. The rapid development of technology, especially the online sector has allowed
businesses to trade in a way that was previously impossible.
People around the world can conduct business activities without going through the traditional way of face-to-face interaction. Anyone who has access to the internet can become
a potential trader or business person within seconds; and a
sale can be made within seconds. This opens up new business
opportunities every second. Information is readily available to
anyone who seeks it, be it current world affairs, places to shop
or subscribe to a mobile service provider.
It is hard to define whether the internet has made our lives
easier or more difficult because it all depends on who one may
ask. In the past or pre-internet days, word of mouth among
friends and relatives helps facilitate the decision-making process in many aspects, including shopping, traveling, education,
dining and many more. This is a form of review, comment or
feedback on the experience, often shared with good intentions. But word of mouth could make or break a business even
if it travels at the speed of sound. In the era of the internet
these travel at the speed of light. A bad review online could
send a companys stock prices downwards (Thestar.com, 2012)
or cause millions of loyal customers to terminate their services.
According to a research done by the Nielsen Company, the
Malaysian online shopping market was worth RM1.8 billion in
2010 and was estimated to grow up to RM5 billion in 2014
(Nielsen, 2011). Another research by Nielsen in 2014 shows
that six out of ten Malaysian consumers plan to go online to
purchase flight tickets (67% and third highest globally) and
make hotel and tour reservations (62% and second highest
globally) within the following six months while 58% of Malaysian consumers surveyed (Nielsen, 2014) would go online to
purchase event tickets such as movies, performances and exhibitions (third highest globally).
It is increasingly difficult to find a person who has not seen at
least one viral video on a computer, tablet or mobile phone.
Human beings often share incidents and products or service

experiences with others and then hundreds and thousands

and in many cases, millions of people see it, share it, like it,
tweet it, comment and even talk about it on the radio when it
becomes viral. Often times, the persons and companies affected by this are forced to implement online reputation damage
control. This has become an area of expertise for public relations organisations managing online reputation for companies or individuals.
According to the Competition and Markets Authority or CMA
of the UK, more than half of UK consumers use online reviews
to decide what to buy. Online reviews influence more than $32
billion of UK consumer spending each year (CMA, 2015).
Assistant Professor Michael Luca, a researcher from the Harvard Business School claims that a fertile area of his research
happens to be on how reputation is earned in the digital age.
According to the research, in the city of Seattle alone, Yelp,
which was launched in 2005, had accumulated 60,000 reviews
by 2009, rating 70% of the citys restaurants (Luca, 2011). It is
known that Yelp is the first site to emphasize user reviews for
restaurants over professional critics. It also keeps a historical
database that tracks every review. Lucas study showed that
the Yelp review translated to anywhere from a five percent to
nine percent effect on revenues and that chain restaurants are
not much affected by ratings (Luca, 2011). The greatest effects
were on independent restaurants.
Restaurant owners who are affected by the Yelp rating are not
that happy and argue about the reliability of public reviews
and the measures of quality. There are possibilities that reviews
can be influenced in favour of a particular restaurant (CMA,
2015).

Needs of the Research

According to an e-commerce report released by the Global Information and Insights Company, Nielsen, the number of consumers making online purchases increased significantly in the
past two years (2014). Six out of ten Malaysians say they would
often read online reviews prior to purchasing a product (68%),
as well as take a look at the products online before purchasing
them in-store (64%) (Nielsen, 2014).
Therefore, it is important for the businesses, customers, and
the government to help ensure that multibillion dollar businesses do not thrive on unethical practices to the detriment
of the e-commerce ecosystem. To find out whether the vast
ecosystem of cyberspace empowers consumers to raise their
voices, exercise their rights to be informed, and help people
as consumers to be more unified and build solidarity will be
another important aspect that needs to be studied in detail.
A 2013 study by the Harvard Business School indicated that, at
least in the Boston area, 16% of Yelp restaurant reviews were
fake (Luca, 2015). Several governments like the one in the UK
and Australia have developed measures to discourage fake reviews and to also constantly educate consumers to spot fake
reviews.
However, these efforts to flush out fake reviews seem like an
uphill battle when it comes to regulating online businesses.
Some considerations need to be in place for the online review
companies and those collecting reviews for their businesses, as
highlighted below:

Problem Statement

Nowadays, the internet is full of information. To get information, the first thing that comes to mind is to go Google it.
Approaching festive seasons, people tend to plan and look
for the best tour packages to break away from their daily routine, for honeymoons, for a long overdue rest, and for family
get-togethers. There are many airlines, tour operators, hotels etc. available and vying for attention, especially online. It
takes a lot of consideration, browsing through comments and
feedback before a person makes a decision, be it in booking
a hotel, purchasing a flight ticket, settling on places to dine,
meeting venues and many more. This leads to the question of
the service quality assurance that a person expects by making
a purchase online. The experience of going to a shop, picking out the product, reading the labels, touching it, turning it,
and processing all the information from the packaging before
deciding on a purchase is not the same as going online and
buying a product.

Therefore, online reviews and comments somehow play a significant effect in influencing the online consumers purchase
intention. Online reviews and reputation act as the online version of word of mouth. To a company or individual on the
web, positive reviews are like gold and negative reviews are
detrimental to image, stock market and all.

They need to be transparent about commercial relationships

These companies should ensure that they do not post
or publish misleading reviews
They need to remember that omitting negative reviews
can be as misleading as posting fake reviews (and in
some countries, subject to penalties)
Reviews should be transparent and accountable on
how star ratings are determined
Mechanisms should be put in place to detect fake reviews and to verify the reviews.

Travelers and those planning vacations use several websites to

help plan their travels. A good 25% of the reviews were found
to be fake (Yelp, 2013). As Malaysia becomes a popular tourist
destination in terms of leisure, business and increasingly for
medical purposes, fake reviews could mislead tourists as well
as tarnish the efforts to bring them in.
A brief review of the Malaysian E-Commerce Act and a range
of other Acts related to online transactions may suggest that
more laws are counterproductive to the enforcement and the
protection of both consumers and businesses. There are already media reports suggesting ways to manage reputations
and reviews online from North America, to Europe and Asia,
but these reports failed to highlight the best practices. Several
ISO standards such as the 10000 series give good guidance on
customer satisfaction, complaints handling and dispute resoJournal of the Consumers Research and Resource Centre

lution (ISO, 2013). Others refer to outsourcing and business

collaboration. There are still others which deal with data protection and privacy. These can help improve business to consumer relationships online and even grow online shopping in a
safer and more secure environment.

Literature Review
IN 2008, a Canadian singer, Dave Carroll (2008) who used the
services of a popular North American airline claimed that the
baggage handlers mishandled his guitar by throwing it into the
cargo or trolleys. The guitar was damaged. The airline and the
airport management denied replacement and were not helpful
in addressing his complaints. He then wrote a protest song
and posted it on YouTube in 2009 and in one day it received
150,000 views. It was reported that the airlines stock tumbled
by 10% within four days of the post (Ayres Chris, 2009).
According to Rutherford (2010), who started a Web site, GettingBookReviews.com; He would review a book for $99. But
some clients wanted a chorus proclaiming their excellence. So,
for $499, Rutherford would do 20 online reviews. A few people
needed a whole orchestra. For $999, he would do 50.
Michael Fertik (2006) wanted to create a company that helped
people and businesses control their online reputation and
data. In October 2006, he started Reputation.com. It turned out
customers that were white-collar professionals worried about
their own reputations. Later, after customers began to tune in
to social media, the company added social media monitoring
and management tools. Since it started, Reputation.com has
raised $67 million in venture capital and attracted more than
1.6 million customers. It generally charges small businesses
$1,000 to $4,000 a year.

Proposed Research Methodology

The research method proposed in this study is the mixed research method. It comprises qualitative method for the focus
group discussion/interview (FGD) followed by a quantitative
survey. The sampling method for both qualitative and quantitative method will be convenience sampling. Non-probability
sampling that shares the common characteristic, that is experience in online shopping, will be used for the focus group
discussion. As for the quantitative survey method, the respondents will be those available to participate voluntarily in the
survey, be it with or without online shopping experience.
The focus group will be conducted with six to seven selected respondents that have online shopping experiences. After the focus group session, the discussion will be transcribed
and sent to participants for correction and verification. Then
all data will be collected and analyzed to assist in developing
questionnaires for the survey.
As for the quantitative questionnaires survey, the respondents will consist of anyone that is available to participate in
the study. This means by surveying friends, patrons in various
shops, people at public transit stations, and others that voluntarily agree to fill in the survey questionnaire.

Journal of the Consumers Research and Resource Centre

Possible outcomes
It is expected that the business sectors, especially those who
have online platforms, practice ethical business strategies by
being transparent and accountable about their online reputation management. The outcome of the study is expected to
assist in the establishment of government policies in guiding
the growth of online shopping under an ethical e-commerce
ecosystem. It is also hoped that the government implements
mechanisms to detect fake reviews and to verify claims by the
online business providers.

Conclusion

In this research-in-progress paper, we have outlined a research

model to help investigate effects of online reviews and reputation on consumers behaviour in online shopping that directly influences the marketing strategies and approach of a
company. This model is useful to understand online buyers
decision-making process, and it also helps to explain positive
effects on online transactions, for example, preference and
price premium enjoyed by sellers with good reputation. The
model is under further development, and seeks to incorporate
other cognitive, social and psychological factors. This study has
the potential of creating more research opportunities in the
relatively new area of e-commerce.

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