Development and validation of familiarity, reputation and loyalty scales for internet relationships.

Author:Flavian, Carlos
  1. Introduction

    The correct measurement of phenomena which are the objectives of analysis is the fundamental starting point for any research work that aims to be considered as scientific. In the field of Marketing and Business Economics, the development of scales that allow for the correct measurement of the different phenomena involved has come to acquire a special relevance. Sarabia (1999) put forward a two-fold explanation for this fact: firstly, the study of Business Economics in general and Marketing in particular, has adopted and used knowledge from other scientific disciplines such as Sociology and Psychology, including complex concepts such as culture and self-confidence; secondly, the evolution of research in Marketing and its associated disciplines has generated new concepts and theories whose measurement and quantification have constituted a critical aspect in the development of these kinds of studies.

    Taking into account the particular importance that the process of the development and validation of measurement scales has acquired in specialist marketing literature, this study concentrates on the development and validation of scales that allow the quantification of three basic concepts concerning Internet relationships: the user's familiarity with the Internet server, the user's perception of the reputation of the server and the user's loyalty towards the same. This study also analyses the close relationships that exist between the three phenomena in a context of business activity that is receiving more and more attention due to the extraordinary future growth expectations associated with Internet transactions.

    Interest in this work is therefore not only based on the development of new measurement scales for the quantification and analysis of relationships between the aforementioned constructs but also because the study concerns what will quite probably be, from a scientific and professional point of view, the most important interaction media in the near and fore-seeable future--the Internet.

    It is worth making the point that the Internet has become the habitual channel of communication between the company and its environment. The most recently available data reflect the spectacular growth in the volume of business that is conducted through the Net, both in relationships of a commercial nature (AECE, 2003) and in terms of Electronic Government initiatives (Guinaliu, 2003). As a consequence, the Internet has received great attention in contemporary Marketing and Business Economics literature (Geyskens, Gielens and Dekimpe, 2002; Calantone and Schatzel, 2000).

  2. Analysis of the concepts of familiarity, reputation and loyalty

    2.1. Analysis of the concept of familiarity

    The familiarity of the consumer with a product or service is a field of analysis that has attracted the attention of marketing researchers for a number of decades (Desai and Hoyer, 2000; Johnson and Russo, 1984); it has on occasions been used as a synonym for the concept of 'prior consumer knowledge' (Alba and Hutchinson, 1987). Research carried out on this concept in the area of individual purchasing behaviour is of particular interest, due to the influence that familiarity has on the process by which the consumer makes decisions (Bettman and Park, 1980; Park and Lessing, 1981; Ratneshwar, Shocker and Stewar, 1987).

    Familiarity can be defined as "the number of product-related experiences accumulated by the consumer" (Alba and Hutchinson, 1987) and reflects the direct and indirect knowledge that the individual possesses about a product category (Alba and Hutchinson, 1987). Some authors consider that familiarity with a product is not only achieved through use but also through the search for information that affects the consumer and through data that reaches the consumer via advertising (Gursoy, 2001). It is for this reason that the prior literature has confirmed that products advertised on television are more familiar to the consumer than existing alternatives on the market because television advertising is more intensive and favours this kind of phenomena (Kent and Allen, 1993; Stewart, 1992).

    In all the specialised literature, the concept of familiarity has been related to diverse variables. Recent research indicates that product familiarity may reduce uncertainty about the possibility of undesirable results for the consumer which might generate sensations of shame or embarrassment when acquiring specific goods or services (Dahn, Manchanda and Argo, 2001): familiarity leads to greater individual confidence and reduces indecision in some potentially embarrassing situations (Miller 1992; Parrott and Smith 1991).

    The inclusion of the variable of familiarity in studies on Internet consumer purchasing behaviour is still uncommon and been less than rigorously applied. An exception is the work of Gefen (2000), which indicates, in a similar way to the more contextually traditional research of Alba and Hutchinson (1987), that familiarity can act as a subjective mechanism that reduces uncertainty and simplifies relationships. At the same time, familiarity, understood as the degree of knowledge of the activities undertaken by the other party (e.g. exact knowledge of how to find information on a product on a website and how to place an order), will reduce uncertainty in accordance with the improvement that this supposes in the level of the individual's confidence in the habitually used website. Using the same logic that relates familiarity and confidence, Walczuch, Seelen and Lundgren (2001), in a study that analysed the psychological determinants of website confidence, argued that greater familiarity generates greater confidence, a viewpoint shared by Bhattacherjee (2002).

    Familiarity can also exercise a positive influence on loyalty. In fact, and in accordance with the specialist literature on the analysis of consumer brand familiarity, it seems reasonable to expect that individuals that have greater familiarity are also more loyal to the company concerned--in our case an Internet server.

    There are three main reasons that enable us to posit this relationship:

  3. Familiarity reduces cognitive effort in making decisions, they are simplified and in some cases, become automatic (Alba and Hutchinson, 1987).

  4. Due to its positive effect on the consumer's skills, familiarity favours an increase in the level of the individual's self-confidence. Greater self-confidence in decisions referring to a specific website would be likely to increase frequency of use, leading to increased loyalty.

  5. Familiarity may increase the degree of confidence in a particular website due to the effects that it may have on existing uncertainty (Gefen, 2000).

    With due consideration given to the above, we are able to propose the following hypothesis:

    H1. Website loyalty is positively and directly related to the degree of the user's familiarity with that website.

    2.2. Analysis of the concept of reputation

    The concept of reputation has been discussed and analysed in the relevant literature from many diverse perspectives, including those of Economics, Strategic Management and Marketing. Studies from the field of Applied Economics have highlighted the relationship between the reputation of a company and the quality of its products or its prices (Shapiro, 1983; Wilson, 1985). Strategic Management theorists have argued that reputation is an intangible resource of great importance to company results and even its very survival (Fombrun and Shanley, 1990; Hall, 1993). From the perspective of Marketing, the concept of reputation has often been associated with the concept of 'brand value' (Aaker, 1996) or the credibility of the company as understood by its clients (Herbig, Milewicz and Golden, 1994).

    What is understood as the reputation of an entity is the result of its historical relationships with the environment that surrounds it; the history of the interactions between the company and its clients serves as a source of information for the clients to evaluate the quality of the products offered in comparison with available alternatives (Yoon, Guffey and Kijewski, 1993). Reputation can therefore be defined as "an estimation of the consistency of a determined attribute over a prolonged time" (Herbig and Milewicz, 1993). In relation to this definition, it can be noted that reputation may make reference to different attributes so that a company may have a 'good reputation' and a 'bad reputation' at the same time: for example, a company could have a positive image of environmental awareness whilst at the same time be failing its shareholders. Nevertheless, reputation may also be considered from a more global perspective, particularly associated with the credibility of an entity, in other words, the comparison of what a company promises and what it actually delivers. In this way, reputation would be the degree to which the company is honest and concerned about its clients (Doney and Cannon, 1997). In this study, reputation will be measured in its global sense as this method offers a greater practical application in terms of future empirical and theoretical developments.

    Reputation can have a clear and direct effect on loyalty (Andreassen and Lindestad, 1998; Robertson, 1993; Yoon et al., 1993), leading to an increase in sales and market share (Shapiro, 1982). With this in mind, and concentrating attention on Internet transactions, it is worth pointing out that some authors have claimed that reputation is a fundamental element in the success or failure of an enterprise--it can act as an incentive (when positive) or as a disincentive (when negative) to purchase (Kollock, 1999). This is the basis for the second hypothesis:

    H2. Website loyalty is positively and directly related to the user's perception of the reputation of that website.

    2.3. Analysis of the concept of loyalty

    Consumer loyalty towards a brand or product is one of the variables that has received most attention in...

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