Effects of Brand Image, Online Word of Mouth, and Price Discount on Consumers Purchase Intention - Mobile Phone as the

Example
Cheng-Hsun Ho*, Shu-Hui Chang, , Shih-Ting Hung, Yi-Ting Chen, Kuang-Hui Chiu Department of Business Administration, National Taipei University, Taiwan 69, Sec 2, Jian-Kuo N. Rd, Taipei City 10433, Taiwan ROC jeffher@mail.dba.ntpu.edu.tw diphie@gmail.com unku.hong@gmail.com wcintw@gmail.com khchiu@mail.ntpu.edu.tw *Corresponding Author: jeffher@mail.dba.ntpu.edu.tw ABSTRACT Many researches refer that brand image and word of mouth both influence customers perceived quality and perceived risk, and therefore further affect their purchase intention. However, seldom researches mention the interaction between brand image and word of mouth. Besides, on the highly competition market, price discount may not only increase sales volume but decrease customers perceived quality. For this reason, this paper employ brand image, online word of mouth, and price discount as the independent variables to examine the direct effects and interactive effects. Besides of external stimulation, personality may also moderate the relationship of above mentioned variables. Thus, customers disposition to trust is as well regard as moderating variable. This paper employs a 2(high and low brand image) x 2(positive and negative online word of mouth) x 2(high and low price discount) between-subjects factorial design. Eight versions of a questionnaire are developed to test the main, interactive, and moderating effects of above variables. This study found that the main and interactive effects of those three independent variables indeed influence buying intent, and disposition to trust indeed moderate the relationship between online word of mouth and buying intent. It was suggested that operators should pay more attention on online word of mouth and disposition to trust to stimulate customers buying intent. Keyword: Brand Image, online Word-of-mouth, Price Discount, Disposition to Trust, Impulsive Traits, Purchase Intention 1. Introduction With the growing prevalence of mobile phones, almost everyone has a mobile phone in Taiwan. According to National Communications Commission (NCC), the penetration rate of mobile phones reaches 104.6% by the third quarter of 2007. In

other words, every 100 Taiwanese people own an average of 104 mobile phones. The number of mobile phone users is still on the increase. Mobile phones are higher-priced products. Because a higher financial risk is involved in the purchase of mobile phones, consumers also have a higher level of involvement. For this kind of products, consumers will be engaged at a higher level in collection of extrinsic information. They use some product cues as indicators of product quality to reduce risks of purchasing the product (Monore & Krishnan, 1985). Some studies have pointed out that word of mouth and brand image are extrinsic cues for consumers. With the advancement of the Internet technology, spread of word of mouth is no longer confined to face-to-face communication. Online word of mouth is becoming more influential to consumer behaviors. Many previous studies indicated that brand image and online word of mouth are influential to the perceived risk and perceived quality of a product, which further affect consumers purchase intention. However, the interactive effects between brand image and online word of mouth have seldom been explored and discussed. Thus, this study aims to investigate these two extrinsic cues and understand their effects on consumers purchase intention. In the present, there are more than 20 brands of mobile phones in the market. Price discount is a promotional strategy commonly adopted to increase the sales performance of mobile phones. Most people are easily attracted to price discounts. As pointed out by Blattberg & Neslin (1990), price discount has positive effect on sales performance. Nonetheless, such strategy can sometimes induce consumers speculation of the quality of the promoted product and decrease their purchase intention. In this case, the brand image of the product will be adversely impacted. Brand awareness can maintain consumers perception of a products quality to a certain extent. If an excessively large discount is applied to products of a well-known brand, the sales volume of the products may be negatively affected. Therefore, how to provide an optimal level of discount is really important. In addition to the simulation of special offers, consumers personality traits are also factors affecting their purchase orientation. Every consumer has a different character, cultural background, and experiences, so personal traits vary from one consumer to another. In this paper, two traits of consumers, including disposition to trust and impulsive traits, are studied. As online word of mouth and brand image are extrinsic cues, consumers disposition to trust determines the level to which they trust these cues and also their purchase intention. Besides, studies on consumers impulsive traits have mentioned its effect on their purchase intention. Will consumers purchase buying tendency moderate the relationship between brand image, online word of mouth and consumers purchase intention? This is one of the primary issues in this paper. Hence, we incorporate consumers disposition to trust and impulsive traits as

moderating variables in the research model to find out whether these two variables moderate the relationship between the independent variables. Based on the above-mentioned motives, we stand in the position of mobile phone sellers to explore the effects of brand image (high and low) and online word of mouth (positive and negative) on consumers intention to purchase mobile phones. In our model, the effects of price discount and moderation of two personal traits are also considered. 2 Literature Review 2.1 Brand Image Consumers usually develop a brand belief for each brand according to the attributes of its products. Such brand belief will later become a brand image (Kotler, 2000) which consumers associate with brand names. Biel (1992) described that brand image as an association with brand name. Advertisement, packaging, corporate identity, public relations, and information provided in promotional activities can all form certain brand associations on the mind of consumers after cognitive processing. According to Dobni & Zinkhan (1990), brand image is the reasoned or emotional perception that consumers attach to specific brands. Keller (1993) defined brand image as perceptions about a brand as reflected by the brand associations held in consumer memory. This definition is adopted in this study. Brand associations refer to any idea associated with a brand, including associations with the product, brand preference, brand strength, and brand uniqueness. 2.2 Online Word of Mouth The study aims to explore the effects of word of mouth created by a large number of online visitors on consumers purchase intention. Thus, online forums and message boards are selected as the main media of word of mouth. Based on the definitions of positive and negative word of mouth proposed by previous researchers, we define positive word of mouth as positive information which is actively and proactively spread on online forums or message boards by customers having positive feedbacks on the product and service of a company. Negative word of mouth is defined as negative information which is actively and proactively spread on online forums or message boards by customers having negative feedbacks on the product or service of a company. Several researchers have empirically indicated that compared with positive word of mouth, negative word of mouth is given a higher weight in product evaluation and purchase decision. Negative word of mouth is also spread at a faster speed than positive word of mouth. Maheswaran & Meyers-Levy (1990) mentioned that if negative word of mouth appears as a cue for consumers who are making a purchase decision, such negative word of mouth is very likely to be seriously considered in the

evaluation and more trusted than positive word of mouth. 2.3 Price Discount Price discount is the most commonly seen promotional measure, partly because it is easier to operate, and partly because consumers can directly perceive the economic saving incentive and have more purchase intention. Seibert (1997) pointed out that consumers prefer direct price discount to other promotional measures. Price stimulation is also most effective in motivating impulsive buying. If consumers receive information about discounts in the store, they are likely to have over-buying or non-planned buying behaviors. It should be noted that it is the economic saving incentive that induces consumers purchase intention, rather than product quality. After the promotion, consumers may not necessarily purchase the same product again. If the incentive exceeds a reasonable range, consumers will begin to doubt the quality of the product. Their purchase intention may be decreased by the association with products of lower quality. In this case, the sales volume of a promoted product may be negatively impacted if the price discount is too large (Ehrenberg & Charlton, 1973). For this reason, we will examine the effect of price discount on the proposed model. 2.4 Disposition to Trust Disposition to trust refers to ones tendency to believe or not to believe others depending on his past experience and whether promises given to other people in the environment have been fulfilled. The degree of this disposition to trust is also affected by ones personal traits, experience, and cultural background. McKnight, Cummings, & Chervany (1998) defined disposition to trust as ones propensity to trust human nature and believe in others. Disposition to trust is a trait of believers. It firmly exists in ones mind and deeply affects whether he can trust others or not. Different people have a different disposition to trust, all depending on their individual propensity to believe in others. Many researchers have proposed that consumers disposition to trust affects their attitude toward online stores to various degrees. According to Gefen (2000), consumers disposition to trust affects their trust for websites. That is to say, if they have a higher disposition to trust, they will be more willing to believe the information presented on the trusted websites and have a higher intention to buy goods on these websites. In this study, we will find out whether consumers disposition to trust affects their trust for information spread through online word of mouth and trust for product quality as well as whether it can further affect their purchase intention. 2.5 Impulsive Traits Impulsive buying tendency is a measure of how one can potentially make an immediate, unplanned, and unreflective purchase. It is viewed as a trait constituting

impulsive buying (Weun, Jones, & Beatty, 1998; Dholakia, 2000). Rook (1987) argued that impulsive buying tendency is influenced by consumers internal conflict and long-term value of consumption, so it is also called impulsive trait. It is the tendency to have a quick reaction to stimulation without reflection or evaluation of consequence. People with this trait are easy to have optimistic emotions. Having a positive impression of a product and a strong desire to own it, they will make a purchase decision with no reflection. It has been shown that consumers with high impulsive traits can be easily motivated to make a purchase decision and tend to be more materialistic. Their shopping list is usually left open. They are easily indulged in the immediate satisfaction of buying desire, with higher acceptance of immediate buying impulses. Emotionally, they can be easily motivated to have an unintended buying behavior (Hoch & Loewenstein, 1991). Thus, we view impulsive traits as an important factor that moderates consumers purchase intention. 2.6 Purchase Intention In many studies, purchase intention is used to measure consumers behavioral intentions. Behavioral intentions can be used to predict ones behavior. They refer to using subjective perceptions to judge ones tendency of having certain behaviors in the future. Compared with belief, feeling, and attitude, behavioral intentions have a closer tie with practical behaviors. Thus, when predicting ones behavior, behavioral intentions are usually considered as a more accurate measurement index. Purchase intention means a subjective inclination that consumers have towards a certain product and has been proven to be a key factor to predict consumer behavior (Fishbein & Ajzen, 1975). Factors affecting consumers purchase intention are numerous. Zeithaml, Leonard, & Parasuraman (1993) mentioned that consumers purchase intention is influenced by objective price, perceived quality, perceived value, and product attributes. In this study, we use consumers purchase intention as an index of consumer behavior and explore the effect of various variables on consumers purchase intention.

3 Model and Hypotheses

The aim of this study is to explore the effects of brand image, online word of mouth, and price discount on consumers purchase intention. Two moderating variables, namely disposition to trust and impulsive traits, are employed to verify the moderating effect of these two variables on the relationship between the above-mentioned variables. In our research model, brand image, online word of mouth, and price discount are set as independent variables, purchase intention as a dependent variable, and disposition to trust and impulsive traits as moderating variables. The research model is shown in Fig 1.

Brand Image

Disposition To Trust

Word of Mouth

Purchase Intention

Price Discount

Impulse Traits

Fig 1. The research model Brand image is influential to consumers purchase decision and is one of the key factors considered by marketers. It has been indicated that brand image is an extrinsic cue for evaluation of product quality, and a better brand image results in a higher perceived quality (Grewal, Krishnan, Baker, & Borin, 1998). Thus, when consumers intrinsic cues or other attributes of a product cannot help consumers judge the quality of a product, brand image is usually used as a basis of evaluation. According to Aaker & Keller (1990), a good brand image can enhance consumers brand loyalty, trust, and also intention to purchase products of the brand. Hence, brand image has direct influence on product sales volume (Park, Jaworski, & MacInnis, 1986). H1: A higher brand image leads to higher consumers purchase intention. Word of mouth is a major informal communication channel of consumers. It affects consumers short-term and long-term decision of buying a product. Thus, it plays an important role in consumer behavior (Herr, Kardes, & Kim, 1991; Bone, 1995). Arndt (1967) pointed out that consumers exposed to positive word of mouth are more likely to make a purchase decision; consumers exposed to negative word of mouth are less likely to make a purchase decision. H2a: Positive online word of mouth leads to higher consumers purchase intention. H2a: Negative online word of mouth leads to lower consumers purchase intention. Promotion refers to all marketing activities that can motivate consumers to have quick purchase behavior or fast increase sales volume by providing additional benefits to consumers to temporarily change their original perceptions of a products price and value (Shimp, 1997). It is intended to stimulate consumers needs, enhance product sales volume, and create popularity of the product. When a price discount is offered, consumers will perceive the economic saving incentive of the promotion. They will have increased purchase intention and even an immediate buying behavior (Dommermuth, 1989).

H3. A higher percentage of price discount leads to higher consumers purchase intention. Ehrenberg & Charlton (1973) pointed out that if the incentive of a promotion exceeds the reasonable range accepted by consumers, such incentive may induce consumers speculation of the promotion or product quality. Consumers may begin to associate the promotion to low product quality and have lower purchase intention. In other words, the promotion has negative effects on product sales performance. The level of brand image influences consumers perception of quality. Della Bitta, Monroe, & McGinnis (1981) mentioned that with the increase of price discount, products with a better brand image and awareness can still maintain their perceived quality and further affect consumers purchase intention. Consumers are also less likely to associate the promotion with inferior quality. Jedidi, Mela, & Grupta (1999) argued that long-term promotion has significant and negative influence on consumers brand choice. It rather influences consumers to purchase until a discount is offered. H4: The interactive effects between price discount and brand image have influence on consumers purchase intention. The positive relationship between perceived quality and word of mouth has been empirically discovered (Hartline & Jones, 1996). Word of mouth presented in a more positive manner leads to higher perceived quality. Thus, online word of mouth can stabilize the perceived quality of a promoted product. Even for a product sold at a reduced price, positive word of mouth can still increase consumers purchase intention. H5: The interactive effects between price discount and online word of mouth have influence on consumers purchase intention. Herr (1991) mentioned that if a positive brand image is retained in consumers memory, this brand can be less affected by negative word of mouth. Besides, a higher brand image leads to higher perceived quality; a lower one leads to lower perceived quality. More positive word of mouth also leads to higher perceived quality; more negative word of mouth leads to lower perceived quality. Considering the effects of brand image and online word of mouth on perceived quality, we hypothesize that the interaction between brand image and online word of mouth influences consumers purchase intention. H6: The interactive effects between brand image and online word of mouth have influence on consumers purchase intention. Consumers disposition to trust affects the level to which one can be trusted. Especially when abundant or definite information is unavailable, disposition to trust becomes even more important. Positive and negative online word of mouth are subject

judgments of other consumers spread on the Internet. If consumers have a higher disposition to trust, they tend to easily believe in others and listen to their opinions. The influence of online word of mouth can also be more profound. Brand image is constantly viewed as an extrinsic cue in consumers evaluation of a product quality to reduce risks of buying the product. Consumers with a high disposition to trust tend to trust the perceived quality of products with a higher brand image and have more intention to buy the products. Gefen (2000) pointed out that consumers with a higher disposition to trust have more trust for e-commerce providers. In this study, we infer that this phenomenon can be extended to the physical environment. That is, consumers with a higher disposition to trust will increase the influence of brand image, online word of mouth, and price discount on them. H7a: Disposition to trust has moderating effect on the relationship between brand image and consumers purchase intention. H7b: Disposition to trust has moderating effect on the relationship between online word of mouth and consumers purchase intention. H7c: Disposition to trust has moderating effect on the relationship between price discount and consumers purchase intention. People with impulsive traits are relatively more planless, impulsive, easy to motivate, and fond of spending (Puri, 1996). Consumers with stronger impulsive traits are more likely to have unreflected buying behaviors. Thus, it can be inferred that people with impulsive traits will decrease the influence of low brand image, negative word of mouth, and high price discount and also increase the influence of high brand image, positive word of mouth, and price discount on them. H8a: Impulsive traits have moderating effect on the relationship between brand image and consumers purchase intention. H8a: Impulsive traits have moderating effect on the relationship between online word of mouth and consumers purchase intention. H8a: Impulsive traits have moderating effect on the relationship between price discount and consumers purchase intention.

4 Methodology
We adopted a 2 (high and low brand image) x 2 (positive and negative online word of mouth) x 2 (high and low price discount) between-subjects factorial design. Based on the between-subject design, eight different experimental contexts were created to prevent the subjects from knowing manipulation of the variables and providing false responses. The questionnaires were mixed at random and distributed to the subjects. Each subject was assigned to only one experimental context. In the experiment, a description of the experiment was first provided, and an advertising leaflet containing

photos, specification, original price, and discounted price of mobile phones was given to the subject. To control the potential disturbance of product appearance and functions, mobile phones with almost similar specification and descriptions were provided. Brand was the only difference. 4.1 Pretest Before the formal experiment, we performed a pretest to understand which mobile phones had a higher brand image and which had a low one in the mind of consumers. Therefore, from numerous brands of mobile phones, we could select the brand representative of high brand images and the brand representative of low brand images. Also, we could explore how much price discount was considered as high and how much as low for subsequent experiment. The subjects in the pretest were students of National Taipei University, so the effective response rate was high. All 33 questionnaires distributed were returned, and 32 copies were valid. Through Scheffes Test for multiple comparison, we compared brands in pair and find out whether one brand has a significantly better brand image than the other. The analysis result indicated that Nokia was representative of high brand images. The obtained statistics were consistent with the finding of InsightXplorer. In terms of the subjects perceptions of high and low discount levels, we found the mean and standard deviation of high discount levels were 6.97 and 1.307, respectively; the mean and standard deviation of low discount levels were 2 and 1.164, respectively. We used mean1SD in the measurement. Thus, the highest level of low discount levels 8.2 (18% off) was taken as the level of low discount, and the lowest level of high discount levels 2.8 (72% off) was taken as the level of high discount. 4.2 Measures of Variables Brand image Brand image is a belief that consumers develop for each brand according to the attributes of its product. Such belief will later constitute a brand image that consumers will associate with brand names (Kotler, 2000; Biel, 1992). In this study, brand image was divided into high brand image and low brand image. According to the pretest result, Nokia was as representative of high brand images, while DNET was representative of low brand images. In the design of advertising leaflets, high and low brand images were manipulated. Different photos and brand names were provided. Online word of mouth Positive (negative) word of mouth refers to the positive (negative) feedbacks actively and proactively spread on online forums or message boards by consumers who have positive (negative) feedbacks on the service or product of a company. Based on the styles of message boards, two word of mouth messages (one positive and one negative)

were simulated. The content of the messages included online evaluation and star rating. To avoid the impact of unclear design of experimental contexts or subjects different perceptions of word of mouth on the experimental result, a question Overall, how to you evaluate the content of this message? was used to confirm each subjects perception of given word of mouth. Discount level Discount is a promotional measure that resellers use to induce consumers rapid purchase behavior or fast increase of product sales volume by providing additional benefits to consumers to temporarily change their original perception of the product price and value. In this paper, price discount was measured by discount level. Discount level is defined as the difference between original price and discount divided by the original price. We explored the reasonable range of discount levels through a pretest, so that the scenario that an excessive discount reduces consumers purchase intention can be avoided. In the pretest, the high discount and low discount levels were 2.8 (72% off) and 8.2 (18% off), respectively. In the design of advertising leaflets, these discount levels were used to explore the effects of discount levels on consumers purchase intention. Disposition to trust, impulsive traits, and purchase intention Disposition to trust refers to ones propensity to trust human nature and believe in othersones propensity to trust human nature and believe in others. In this paper, we measured the subjects disposition to trust using five questions of the disposition to trust scale developed by Gefen (2000). Consumers impulsive traits are a measure of how one can potentially make an immediate, unplanned, and unreflective purchase. The scale developed by Adelaar et al. (2003) was adopted. Purchase intention is the possibility that one makes a purchase decision. The scale developed by Dodds et al. (1991) was applied, and some items were modified according to the experimental contexts. All the questions were measured on Likerts five-point scale, ranging from very disagree to very agree. Table 1. Question items associated with disposition to trust, impulsive traits, and purchase intention Variables Disposition to trust No 1 2 3 4 5 1 2 Items I usually trust others. I have the disposition to rely on others. I think most people are reliable. I am confident of human nature. I usually trust others unless there is a particular reason. When you go shopping, you will make an unplanned purchase. You are used to making unplanned purchases.

Impulsive traits

3 4 5 1 2 3 4

Purchase intension

When you see something interesting, you will buy it disregarding the consequence. Buying something unplanned of is interesting. You will avoid buying things not on the shopping list. You will consider buying this product. You think it is worth than it costs. You think buying this product is a good decision. You think products of this brand can induce your purchase intention.

4.3 Data and Instrument Validation Convenience sampling was adopted. The sample was collected through online questionnaires and paper-and-pencil questionnaires. There were eight experimental groups. At least 40 questionnaires were distributed to each group. 377 questionnaires were distributed, and 377 were collected. Excluding invalid responses, 340 responses were valid, resulting in a valid response rate of 90.2%. The quality of the questionnaire was measured first, using reliability and validity tests. The results are presented in Table 2. It can be discovered that all the constructs have a Cronbachs alpha higher than 0.6, indicating a good internal consistency of the constructs. We further applied principal component analysis to extract common factors. The derived KMO value was 0.79, and all the factors reached the level of significance in Bartletts test. This means there were common factors between samples, and factor analysis could be conducted. As shown in Table 2, three factor constructs were extracted. Whether in purchase intention, disposition to trust or impulsive traits, all the items converged to the expected construct. It can be inferred that our scale has good validity. Table 2. Principal component analysis result
Expected construct Purchase intension (Q1) Item Q1-3 Q1-1 Q1-2 Q1-4 Q2-3 Q2-4 Q2-1 Q2-5 Q2-2 Q3-1 Q3-2 Q3-5 Q3-3 Q3-4 1 0.925 0.911 0.904 0.836 0.815 0.79 0.771 0.741 0.461 0.739 0.714 0.61 0.601 0.43 2 3 Mean 2.80 S.D.

Cronbachs 0.92

3.87

Disposition to trust (Q2)

3.54

2.75

0.77

Impulsive traits (Q3)

3.12

3.01

0.63

5 Results
Before performing the analysis of variance, it is necessary to verify if variances are equal across all groups and in normal distribution. To make the nominal scales of independent variables also applicable to statistic analysis, we needed to transform nominal variables into continuous variables. High brand image, positive online word of mouth, and high price discount were set as 1; low brand image, negative online word of mouth, and low price discount were set as 0. A homogeneity test of variances was carried out using Levenes test. Results showed that all variables, including brand image, online word of mouth, price discount, disposition to trust, and impulsive traits, did not reach the level of significance. Thus, the assumption that variances should be equal was not violated. 1. Test for main effects and interaction effects

In this section, analysis of variance (ANOVA) was adopted to test the main effects and interaction effects of brand image, online word of mouth, and price discount on consumers purchase intention. (1) Three-way ANOVA: First of all, the effects of brand image, online word of mouth, and price discount on consumers purchase intention were first tested using three-way ANOVA. As shown in Table 3, the F-value is 0.012, p-value is 0.913. The result does not reach the level of significance. Table 3. Result of three-way ANOVA
Source of variance Brand image (A) Online word of mouth (B) Price discount (C) (A) (B) (A) (C) (B) (C) (A) (B) (C) Sum of square 8.804 145.741 8.427 2.428 1.923 2.064 0.005 Degree of freedom 1 1 1 1 1 1 1 Mean square 8.804 145.741 8.427 2.4282 1.923 2.064 0.005 F Value 19.946*** 330.202*** 19.092*** 5.502* 4.358* 4.676* 0.012

*:significant at a .05 level; **:significant at a .01 level; ***:significant at a .001 level

(2) Test for interaction effect between two variables: The F-value in the three-way ANOVA does not reach the level of the significance, so it is necessary to carry out the test for interaction effect between two variables. From Table 3, it can be discovered that the interaction between brand image and online word of mouth has an F-value=5.502 and p-value=0.020. The F-value reaches the significance level. A further test for simple main effect is required. The interaction between brand image and price discount has an F-value=4.358 and p-value=0.038. The F-value reaches the significance level, so a further test for simple main effect is needed. The interaction between online word of mouth and price discount has an F-value=4.676 and

p-value=0.031. The F-value reaches the significance level, so a further test for simple main effect is also required. From the above results, we can conclude that H4, H5, and H6 are all supported. (3) Test for simple main effect: For significant interaction effects between variables, test for simple main effect should be carried out. The result is shown in Table 4. The mean and SD of the simple main effect are shown in Table 4 for subsequent test of significance. Table 4. Test for simple main effects
IF Low brand image High brand image Negative word of mouth Positive word of mouth Low brand image High brand image Low price discount High price discount Negative word of mouth Positive word of mouth Low price discount High price discount Source of variance Online word of mouth Brand image Price discount Brand image Price discount Online word of mouth F Value 108.922*** 206.743 *** 1.852 22.701 *** 11.667 * 0.026 16.980 *** 0.568 2.003 18.573*** 119.867*** 206.514***

*:significant at a .05 level;**:significant at a .01 level; ***:significant at a .001 level

Table 5. The effect of variables on purchase intention in limited conditions

IF Variable Mean 2.04 3.19 2.19 3.66 3.19 3.66 2.39 2.85 2.39 2.95 3.24 3.67 2.04 S.D. 0.642 0.749 0.794 0.55 0.749 0.550 0.833 0.913 0.833 0.945 0.729 0.565 0.709

Low brand image High brand image Positive word of mouth Low brand image Low price discount Positive word of mouth Low price discount

Negative word of mouth Positive word of mouth Negative word of mouth Positive word of mouth Low brand image High brand image Low price discount High price discount Low brand image High brand image Low price discount High price discount Negative word of mouth

Positive word of mouth High price discount Negative word of mouth Positive word of mouth

3.24 2.20 3.67

0.729 0.737 0.565

(4) Individual main effect: All the interaction effects reach the level of significance, so whether the individual main effects shown in Table 3 reach significance is not very meaningful. In this case, one-way ANOVA should be applied to test the significance of individual main effects. As shown in Table 6, different brand images have significant different effects on consumers purchase intention. The F-value and p-value of brand image are 10.641 and 0.001 respectively. The result reaches the level of significance, so H1 is supported. Variance in online word of mouth also has significant different effects. The F-value and p-value are 293.452 and 0.000 respectively. The result reaches the level of significance. Different levels of price discount also have significant different effects. The F-value and p-value are 4.818 and 0.029 respectively. The result also reaches the level of significance, so H3 is supported. Table 6. One-way ANOVA
Source of variance Brand image F Value 10.641*

Online word 293.452*** of mouth Price 4.818* discount

(5) The effects of online word of mouth: The effects of online word of mouth were classified into four types: negative and weak, negative and strong, positive and weak, and positive and strong. One-way ANOVA was conducted to test if different intensities of word of mouth would affect consumers purchase intention. The result is shown in Table 7. It can be discovered that the effect of positive and strong online word of mouth has a mean of 3.49, which is greater than the mean of positive and weak online word of mouth 2.59. This implies that more positive online word of mouth can lead to higher purchase intention. Thus, H2a is supported. The effect of negative and weak online word of mouth has a mean of 2.42, which is greater than the mean of negative and strong online word of mouth 1.87. This reveals that more negative online word of mouth can result in lower purchase intention. Thus, H2b is supported. Table 7. The effects of different intensities of online word of mouth on purchase intention Variable Negative and strong word of mouth Negative and weak word of mouth Positive and weak word of mouth Positive and strong word of mouth Mean 1.87 2.42 2.59 3.49 STD 0.636 0.719 0.824 0.645

Purchase Intention

4 3.5 3 2.5 2 1.5

Negative and strong

Negative and weak

Positive and weak

Positive and strong

Online WOM

Fig 2. The effects of different intensities of online word of mouth on purchase intention 2. Test of the effects of moderating variables

The effects of moderating variables were verified using linear regression analysis. Before the analysis, model collinearity should be solved first. We standardized the original values of continuous variables and placed the cross-product term of moderating variables into the model. Through this standardization process, collinearity could be avoided. Table 2 shows that all TOL and VIF values are compliant with the criteria of TOL>0.1 and VIF<10. Thus, the transformed data are good for regression analysis. The moderating effects of disposition to trust and impulsive traits are shown in the following table. Table 8. Result of linear regression
Moderating variables Disposition to trust Model Standardized coefficient () 0.154* 0.149* -0.048 0.675*** -0.037 TOL VIF

Brand image Disposition to trust 0.576 1.737 Disposition to trust brand image Online word of mouth Disposition to trust 0.464 2.157 Disposition to trust online word 0.170* of mouth Price discount 0.136* Disposition to trust 0.085 0.467 2.143 Disposition to trust price 0.103 discount Impulsive Brand image 0.172* Impulsive traits 0.094 0.475 2.106 traits Impulsive traits brand image 0.028 Online word of mouth 0.677*** Impulsive traits 0.012 0.452 2.213 Impulsive traits online word of 0.085 mouth Price discount 0.104 Impulsive traits 0.133 0.515 1.944 Impulsive traits price discount -0.042 *:significant at a .05 level; **:significant at a .01 level; ***:significant at a .001 level

As shown in Table 8, only the product of disposition to trust and online word of mouth reaches the level of significance (=0.17, p=0.003). This finding indicates that disposition to trust will strengthen the relationship between online word of mouth and purchase intention. All the other cross-product terms do not reach the level of significance. Thus, only H7b is supported, and H7a and H7c are not supported. As to impulsive traits, all the cross-product terms do not reach the level of significance either. Therefore, H8a, H8b, and H8c are all unsupported.

6 Conclusion
6.1 Findings If the extrinsic cues of a product, such as brand image or online word of mouth, are higher or more positive, consumers will have higher intention to purchase the product. According to Aaker & Keller (1990), a good brand image can enhance consumers brand loyalty, trust, and also purchase intention. The same finding was obtained in this study. That is, consumers will use brand image as an extrinsic cue and their purchase intention will be further influenced by this cue. Compared with products with a low brand image, those with a higher brand image can induce higher purchase intention of consumers. It was also discovered that positive online word of mouth can increase consumers purchase intention. Likewise, negative online word of mouth can reduce consumers purchase intention. Arndt (1967) also proposed a similar idea before. Our finding is actually consistent with the conclusions of previous researchers. Higher price discount leads to higher purchase intention. Previous researchers argued that promotion can temporarily change consumers original perception of the price and value of a product (Shimp, 1997). When a promotion is offered, consumers will perceive the economic saving incentive of the promotion first. They then increase their purchase intention and even make an immediate purchase decision (Dommermuth, 1989). It was also discovered in this study that when a higher discount is offered, consumers will be more willing to spend. Thus, our finding echoes the conclusion of previous researchers. The interactions of brand image, online word of mouth, and price discount in pair have significant influence on consumers purchase intention. The research results indicated that the interactions of the three independent variables in pair are significant. It should be noted that when in the presence of negative word of mouth, the interaction between brand image and price discount on consumers

purchase intention becomes little. If a product has a low brand image, positive online word of mouth and price discount can increase consumers purchase intention. The price saving incentive caused by price discount can also increase consumers purchase intention. Disposition to trust strengthens the relationship between online word of mouth and purchase intention, but it does not moderate the relationship between brand image and purchase intention or between price discount or purchase intention. It was empirically found that disposition to trust can amplify the effect of online word of mouth on purchase intention. In other words, when there is stronger positive online word of mouth consumers with disposition to trust will have higher purchase intention. Likewise, when there is stronger negative online word of mouth, consumers' purchase intention may be further reduced. The moderating effect of disposition to trust on the relationship between brand image and purchase intention or between price discount and purchase intention is not significant. This is probably because a sound system of consumer benefit protection has been established, whether consumers have a high or low disposition to trust, they can still trust the brands available in the market. They tend not to speculate the motives behind promotional activities. Thus, a stronger moderating effect of disposition to trust on the above mentioned relationships could not be detected. The moderating effect of consumers impulsive traits is not significant. Our results showed that the moderating effect of consumers impulsive traits on the relationships between the three independent variables and purchase intention is not significant. This is probably because mobile phones are high priced commodities, and high priced commodities usually induce a higher level of involvement. For this kind of products, consumers will be more engaged in the collection of extrinsic information (Lin, 2002). Consumers usually make a thorough contemplation before making a purchase decision. Therefore, the moderating effect of impulsive traits will be less significant. 6.2 Management Implications Resellers should attach importance to word of mouth. As mentioned above, online word of mouth significantly affects consumers purchase intention. Resellers of mobile phones should maintain product quality to establish positive word of mouth and even make use of word of mouth as a free propaganda. However, if negative word of mouth appears, brand image may be undermined, and promotional activities can hardly induce consumers purchase intention. Therefore, efforts should be made to eradicate false allegations or rumors, so as to avoid negative word of mouth from doing deeper harms to the brand. It is suggested that mobile

phone makers can set up an online service platform to satisfy the needs of Internet users and facilitate the spread of positive word of mouth and product information. By doing so, they can not only increase product sales performance but also reduce marketing cost. Shall any detrimental rumor appear on the Internet, they can use this platform to clarify the truth and stop further spread of negative rumors. Therefore, crises can be effectively managed. Different measures should be adopted for different brand images For sellers or makers of products with a lower brand image, price discount is helpful for increasing consumers purchase intention. However, the increased sales performance is caused by the price saving incentive brought by the promotion. After the promotion, consumers intention to buy the same kind of products cannot be assured. Therefore, for products with a lower brand image, increasing brand image by creating positive online word of mouth will be more important. For those with a higher brand image, price discount is not significantly influential to consumers purchase intention. In addition to maintaining a good brand image, sellers or makers of this kind of products should pay more attention to online word of mouth and management, so as to further increase consumers purchase intention. Disposition to trust strengthens the relationship between online word of mouth and purchase intention Disposition to trust makes consumers believe the information spread by online word of mouth and increases the effect of online word of mouth. In addition to managing online word of mouth, mobile phone sellers or makers can also take some measures to increase the credibility of product quality and use it to induce consumers disposition to trust. The credibility of product quality can be increased by gaining certification, providing product assurance, and elevating reputation. Besides, testimonies of product users can also be presented on the Internet to gain consumers trust and increase the effect of online word of mouth. 6.3 Limitations and Future Research In our experiment, only texts and graphics were used to create different experimental contexts. The design of our advertising leaflets might be somewhat inferior to that of commercial leaflets we saw in reality. Besides, the way we presented online word of mouth could give the subjects different impressions. In this paper, the duration and frequency of the designed promotion activity were not specified. All these factors could be influential to the subjects when they answered the questions. Thus, the above-mentioned points should be considered in future experimental designs. Moreover, the research sample consisted of mainly students. The representativeness of the sample was indeed insufficient. It is suggested that future researchers expand the

range of subjects. The derived results can have a higher external validity and opinions of a wider spectrum of users can be provided to mobile phone makers or sellers as a reference. In our experiment, only one promotional measure, price discount, was selected. It is suggested that future researchers can include other promotional measures, such as coupons, free samples or bonus collection in the model to find out whether different measures will derive different results. Finally, the promotion information was provided on only advertising leaflets. It is suggested that future researchers can use different media to provide the promotion information and explore the effects of different media on the increase of consumers purchase intention.

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