Copyright by Victoria Filomena Davis 2016 The Thesis Committee for Victoria Filomena Davis Certifies that this is the approved version of the following thesis: Trusting the Guru: Studying the Effects of Online Beauty Guru Reviews on Consumer Opinion Forming and Purchase Intent of Cosmetics APPROVED BY SUPERVISING COMMITTEE: Supervisor: Matthew S. Eastin Brad Love Trusting the Guru: Studying the Effects of Online Beauty Guru Reviews on Consumer Opinion Forming and Purchase Intent of Cosmetics by Victoria Filomena Davis, B.A. Communication Thesis Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Master of Arts The University of Texas at Austin May 2016 Dedication I dedicate this thesis to all those picky consumers who spend hours and hours researching products online. May the information you find here aid you in your quest. Acknowledgements I extend a special thanks to the research participants who took time out of their day to help out with this study, as well as my advisor, Dr. Eastin for working with me throughout the process of these past couple semesters. Everyone’s help is truly appreciated. v Trusting the Guru: Studying the Effects of Online Beauty Guru Reviews on Consumer Opinion Forming and Purchase Intent of Cosmetics Victoria Filomena Davis, MA The University of Texas at Austin, 2016 Supervisor: Matthew S. Eastin This research examines consumer attitudinal and behavioral responses to online consumer reviews, specifically on the YouTube platform. This study seeks to understand how influential both negatively and positively framed reviews are on consumers’ behavioral and purchase intent and attitude toward the consumer created content. Data indicate that message framing has a persuasive effect on consumers’ attitudes, but less so on behavioral and purchase intention. Moreover, the negatively framed review seems to be more influential on consumers than the positive framed review. In sum, these results showcase the intricacies of product review effectiveness, and their impactions on marketing. vi Table of Contents List of Tables ......................................................................................................... ix Trusting the Guru: .................................................................................................1 Chapter I: Introduction ...........................................................................................1 Chapter II: Review of Literature .............................................................................2 Intro and the YouTube Platform .....................................................................2 Beauty Gurus ..................................................................................................4 Source Credibility ...........................................................................................5 Attitude Formation and Purchase Intent .........................................................7 Chapter III: Hypotheses .........................................................................................11 Chapter IV: Research Methods ..............................................................................12 Origin of Data ..............................................................................................12 Sample Description .......................................................................................12 Research Design............................................................................................12 Variables .......................................................................................................14 Data Analysis ................................................................................................15 Chapter V: Results .................................................................................................16 Chapter VI: Discussion ..........................................................................................17 Discussion ......................................................................................................18 Implications & Further Research ...................................................................19 The Role of Motivation.........................................................................19 Chapter VII: Conclusion..........................................................................................22 Appendix A: Questionnaire ....................................................................................23 Resources.. ..............................................................................................................32 vii List of Tables Table 1.1: Group Statistics .................................................................................16 Table 1.2: Independent Samples T-Test.............................................................16 viii Chapter I: Introduction In today’s quickly expanding online social media environment, it is important to understand the effects of consumer opinions on “regular”/ “everyday” people. Many consumers post both positive and negative reviews daily in order to hold businesses accountable. Several research projects have found that product reviews (i.e., also known as e-word of mouth) do influence consumers and their purchasing behavior (Gesenhues, 2013). Recognizing the power of consumer opinions on product perceptions, there have been incidents in which companies fined customers for posting negative reviews of their products and services online (Calvert, 2015). To this end, the current research will examine how commercial reviews on the social network site known as YouTube influences consumer attitudes and behavioral intentions. Specifically, from an Elaboration Likelihood Model (ELM) perspective, this research will look at consumer opinion influence from a different and perhaps more favorable perspective - the YouTube beauty guru product review. Looking at positive and negative reviews, this research will examine attitudes toward the message, behavioral intent, and purchase intent. 1 Chapter II: Review of Literature BACKGROUND and YOUTUBE: Online customer reviews are becoming increasingly popular, and cover many different product categories including movies, electronics, clothing, accessories, cosmetic, music, books, and games. One recognizable example can be seen from Amazon.com, which has allowed its customers to write online reviews of purchased products since 1995. Admittedly, customer comments “have been regarded as one of the sites most successful features” (Harmon 2004, p.2). As the number of reviews has increase, so has the number of sites offering consumers the ability to express opinions about products. Here, consumer review options are now available in areas such as electronics (CNet.com), tourism (TripAdvisor) and automotive (Edmunds.com). Multiple studies researching the effectiveness of consumer reviews seem to suggest that customer reviews have in fact become widely influential on consumer purchasing decisions (Cheung et al. 2012; Duan et al. 2008; Mudambi and Schuff 2010; Park et al. 2007). Further, studies have analyzed “product sales based on data from websites or online product review platforms” (Cheung et al. 2012; Duan et al. 2008). For example, a study performed by Chevalier and Mayzlin (2006) suggests a positive link between book sales and positive online reviews. Liu (2006) found a similar link between positive online consumer reviews from Yahoo Movies and box office revenue. The present research will analyze yet another outlet for consumer reviews: YouTube. YouTube is a video-sharing website headquartered in San Bruno, California. Created in 2005 and purchased in 2006 by Google, YouTube now operates as one of Google's subsidiaries. YouTube allows users to upload, view, and share videos, and to display a wide variety of user- 2 generated and corporate video content. Available content includes video clips, TV clips, music videos, and other content such as video blogs, short original videos, and educational videos. It is important to note that anyone can create a profile on YouTube, called a “channel.” On a channel, users can post a wide range of content, including many videos regarding personal opinions and/or reviews on certain companies, products, or services. YouTube has certain rules and regulations regarding what materials are allowed to be uploaded by users, though most of the rules and regulation deal with copyright (YouTube, 2016). For example, no copyrighted music is allowed to be uploaded, unless it is by the creating artist. Stock music is okay to utilize, as long as it is cited. Generally speaking, the site allows any original user material, which would not otherwise be prohibited by law (e.g., no pornography or adult material, as defined by YouTube’s terms of use). Thousands of videos are uploaded daily from all around the globe, covering a wide range of topics. As defined by the site, there are 15 content categories (cars & vehicles, comedy, education, entertainment, film & animation, gaming, howto & style, music, news & politics, non- profits & activism, people & blogs, pets & animals, science & technology, sport, and finally travel & events) (YouTube 2016), which users can choose from to better categorize their content for targeting, and to allow viewers to more easily find the content they are seeking. Typically, most YouTube beauty gurus fall under “how to & style”, “people & blogs”, or “entertainment”.