Master Thesis “Trust me, I’m an expert” The expert and layman influence of online game reviews on consumer behaviour. Koen Los 348979 Abstract Nowadays more consumers turn to online resources for quality information when purchasing new products. The use of online product reviews is becoming more and more popular. Also it is not just the experts who review new products anymore. Every consumer is able to express his or her opinion about their newly purchased product online and may use this opportunity to do so. This so-called online Word-of-Mouth or e-WOM appears to be an important factor of modern day product sales. Existing research mainly focuses on effects of online reviews on product sales. Very little studies controlled for difference in expert/laymen effects or measured online review effects on willingness to recommend, one of the most important measures of a company’s success today. This thesis tries to give more insights in the influence of online reviews on consumer behaviour. It studies the effects of negative/positive expert and layman reviews on consumers’ (pre-purchase) perceived product quality, willingness to buy and willingness to recommend. We chose video games as our empirical setting. Video games are experience goods for which quality is hard to observe before purchase. Therefore video games appeared to be the perfect setting for this research. To test above-mentioned effects an experimental approach was used in which 171 respondents participated. The respondents were asked to read a positive or negative review that was labelled to come from an expert or layman. After reading the review they were exposed to a gameplay video of a video game that had not yet been released and asked to give their opinion on that video game. Results show that the influence of online reviews on consumers’ perceived product quality, willingness to buy and willingness to recommend is highly significant. Respondents that were exposed to a positive review evaluated the video game higher than respondents that were exposed to a negative review. Furthermore the results show that experts are more influential on a consumers’ willingness to buy a video game than laymen. Finally this study also shows that respondents who are less familiar with a video game are more likely to be influenced by an online review in their willingness to recommend the video game to others. 2 This study shows how online reviews influence consumers’ perceived product quality, willingness to buy and willingness to recommend and therefore shows the importance for companies to manage online reviews like any other marketing communication tool. Even though this study is conducted in the video game industry, the author believes that the results hold for any other experience good as well. 3 Table of Contents Abstract ................................................................................................................................. 2 List of Tables and Figures ............................................................................................... 6 Definitions ........................................................................................................................... 7 1. Introduction .................................................................................................................... 8 1.1 Background and context ..................................................................................................... 8 1.2 Aims and relevance ............................................................................................................. 8 1.3 Research objectives and methodology ............................................................................... 9 2. Literature review and hypotheses ....................................................................... 10 2.1 Experience goods .............................................................................................................. 10 2.2 Perceived product quality, WTB and WTR ........................................................................ 11 2.2.1 Perceived product quality .......................................................................................... 11 2.2.2 Willingness to buy ...................................................................................................... 11 2.2.3 Willingness to recommend ......................................................................................... 12 2.3 The valence of reviews ...................................................................................................... 12 2.4 Expert and laymen effects ................................................................................................. 14 2.5 Product familiarity ............................................................................................................. 16 2.6 Review familiarity .............................................................................................................. 17 3. Methodology ................................................................................................................ 18 3.1 Experimental setting ......................................................................................................... 18 3.2 Sample ............................................................................................................................... 18 3.3 Experiment overview ........................................................................................................ 19 3.4 Experiment description ..................................................................................................... 19 3.5 Measures ........................................................................................................................... 21 3.6 Manipulation checks ......................................................................................................... 22 3.7 Statistical methodology ..................................................................................................... 23 4. Results ........................................................................................................................... 23 4.1 Data cleaning ..................................................................................................................... 23 4.2 Demographics, Descriptive Statistics and Correlations ..................................................... 24 4.3 Hypotheses testing ............................................................................................................ 26 4.3.1 Consumers’ perceived product quality ....................................................................... 26 4.3.2 Willingness to buy ...................................................................................................... 28 4.3.3 Willingness to recommend ......................................................................................... 29 4.3.4 Product familiarity ..................................................................................................... 30 4.4 Robustness checks ............................................................................................................ 34 4.4.1 Reviewer .................................................................................................................... 34 4.4.2 Familiarity .................................................................................................................. 35 4.4.3 Review familiarity ...................................................................................................... 36 4.4.4 Trust in Reviewer ........................................................................................................ 36 4.5 Summary of the results ..................................................................................................... 38 5. Discussion, limitations and suggestions for future research ...................... 41 6. References .................................................................................................................... 45 8. Appendices ................................................................................................................... 48 Appendix A: Fictional reviews ................................................................................................. 48 Appendix B: Questionnaire ..................................................................................................... 49 Appendix C: Test of parallel lines and checks on multicollinearity ......................................... 55 4 Appendix D: Descriptive Statistics ........................................................................................... 58 Appendix E: Review Familiarity and Reviewer Trustworthiness ............................................. 66 5 List of Tables and Figures Table 1: Games Used for Experiment ...................................................................................... 20 Table 2: Variables ............................................................................................................................ 22 Table 3: Pooled Respondent Count .......................................................................................... 24 Table 4: Descriptive Statistics and Correlations ................................................................ 25 Table 5: Rating of the Video Game ........................................................................................... 26 Table 6: ANOVA Consumers'