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CHAPTER II

THEORETICAL FOUNDATION
This chapter examines the relevant theories to be the theoretical foundation of the present
study. It also elaborates the general conceptual foundation, theoretical foundation for each
variable and linkages between variable. The supporting theoretical foundations that will include
e-marketing, endorsement, celebrity, Instagram, trust, perceived usefulness of celebrity
recommendations, attitude, celebrity’s reputation, intention to shop online, and the linkages of
variables within this study. At the end of this chapter, the model of the research will be presented
to show clear relationship variables shown by propositions as proposed from the linkages of
variables.
2.1

E-Marketing

Marketing is a living subject, mainly because it is evolving dynamically. The evolution of
marketing influenced by technology has become e-marketing. According to Strauss and Frost
(2014), e-marketing is the use of information technology for the marketing activity and the
processes for creating, communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society in large. More simply defined, e-marketing is the result
of information technology applied to traditional marketing.
Strauss and Frost (2014) also stated that e-marketing involves much more than basic
technologies and applications. E-marketing today involves web 2.0 which technologies also
connect people with each other for producing and sharing contents (also known as social media).
With this new technology, this creates opportunities and challenges for marketers, which are:

). posting comments on a blog. Inbound Marketing In traditional media. or becoming a fan in company’s Facebook page are examples of customer engagement. . 3. Firstly. It is crucial for marketers to create engaging content to make customers entice the content. marketers cannot reach a large quantity of customers. Website 2.0 has given customers a power to exchange information to potential customers and influence them to buy or not to buy the product from the companies. photos. even endorsement. Power Shift From Sellers to Buyers Savvy customers and high technology has given a power to control the feed from marketers. Customer becomes attached or engaged to products or companies emotionally and intellectually. etc. customers trust each other more than companies. they are all over internet and social media. social commerce (an evolution from e-commerce as a result from huge rising of social media) has become facilitation for customers to exchange eWOM such as giving testimonials or recommendations. thus they become more attentive and favorable toward the product or company. 4. social networks. Inbound marketing components are contents (videos. and search engine optimization to get the company’s social media or website come up on the first page of result of keyword results. however. Customer Engagement Having customers uploading videos. as time goes by and technology reach customers. 2. Content Marketing Content marketing is a strategy involving creating and publishing content on Web sites and in social media. blogs.1. eBooks. More than 50% said they find “a person like yourself” to be more trustworthy. Secondly.

but also includes management of digital customer data and electronic customer relationship management systems (E-CRM systems).New technologies open the door to new marketing strategy and tactics. e-mail and wireless media. Most in the industry would look at it this way. Here are some of the advantages of e-Marketing:  Extremely low risk  Reduction in costs through automation and use of electronic media  Faster response to both marketers and the end user  Increased ability to measure and collect data  Opens the possibility to a market of one through personalisation  Increased interactivity  Increased exposure of products and services  Boundless universal accessibility . however the aim of e-marketing is to meet and satisfy target customers’ needs and wants better than competitors-just like traditional marketing. E-marketing is sometimes considered to have a broader scope than Internet marketing since it refers to digital media such as web. E-marketing can be considered to be equivalent to Internet marketing and Digital Marketing. However.

blogger’s reputation as source credibility is also considered an influential factor in swaying consumer’s decision to buy a certain product. another study has verified that future product sales. blogging has been viewed as a new type of electronic word-of-mouth (eWOM) (Osman et al. 2009). Therefore.Following are some disadvantages of e-Marketing:  Dependability on technology  Security. privacy issues  Maintenance costs due to a constantly evolving environment  Higher transparency of pricing and increased price competition  Worldwide competition through globalisation From a marketing perspective. It has been established that a bloggers’ perceived credibility ultimately leads to consumers’ adoption of eWOM recommendation (Cheung et al. In addition. 2009). 2009). it is inferred that a majority of blog readers finalize their purchasing decisions by reading reviews. the perceived usefulness of a blogger’s recommendation. Moreover. are positively correlated with the volume of blog posts (Dhar and Chang. in our study. interacting with bloggers or complying with a blogger’s recommendation... such as for music albums. A study done by Jain and Posavac (2001) concluded that high-credibility source will be more . The purpose of this study is to examine the correlations between a blog reader’s trusting belief in bloggers. and the subsequent influence trust and perceived usefulness have on the blog reader’s attitudes and behavioral intentions in an online shopping context.

2014). Snap a photo with your mobile phone. this study also includes the blog’s reputation as extrinsic cues of eWOM information quality to test the moderating effect of a blogger’s reputation on readers’ purchasing intentions. then choose a filter to transform the image into a memory to keep around forever. about 70% are women. 2010 by Kevin Systrom and Mike Krieger. 2012) and there are currently 55 million pictures that are being uploaded every day (Ahmad. We imagine a world more connected through photos” (Instagram. Instagram gathered more than twelve million members the first year (CIPR. 2014). Instagram describes themselves as “a fun and quirky way to share your life with friends through a series of pictures. .persuasive in influencing consumers’ purchasing behavior. Instagram is largely made up of urban and youthful demographic. Park and Lee (2009) mentioned that the consumer is more likely to believe in an endorsed eWOM about a product if it is from a highly credible source (highly reputable web site). Instagram is a simple application about snapping and sharing photos that was created on 6th of October.2 Instagram Ashley Ha (2015) defined Instagram as one of many popular social media applications that is used on daily basis. Therefore. Moreover. We're building Instagram to allow you to experience moments in your friends' lives through pictures as they happen. 2. 2014). the heavy using of Instagram has made marketers found a new and niche field for marketing. Instagram is a free photo sharing network where it is simple to share pictures and short videos with others. Instagram was launched in October 2010 and the monthly users are over 150 million people with an increase of people downloading the app in 66 percent from year-toyear (Smith.

2. Celebrity endorsement has been established as one of the most popular tools of advertising in recent time. this paper is an effort to analyze the impact of celebrity endorsements on brands. It has become a trend and perceived as a winning formula for product marketing and brand building. Instagram have given the youths a gathering place for their photos and it has made it possible for them to post their pictures and share the pictures among friends (Findahl. 2012.3 Endorsement An endorser is a person. 2013). While the magnitude of the impact of celebrity endorsement remains under the purview of gray spectacles. pp. who appears with a product in an advertisement saying or indicating that they use and like the product (Cambridge Dictionaries Online).. The benefits that celebrity endorsement contributes to marketing are the influence on favorable word-of-mouth. The most active users on Instagram in Sweden are women in the ages 12-15 and 20-25 (Findahl. 301 & 303). Nowadays it is very common for a marketer to use celebrity endorsement in order to increase sales and extend their market shares. The Internet Infrastructure Foundation has a service and website called Swedes and the internet who states that Instagram is the media of the youth (Findahl. . It is easy to choose a celebrity but it is tough to establish a strong association between the product and the endorser.According to a survey made by the Pew Research Center’s Internet & American Life Project the most frequent users of Instagram are women between 18-29 and 13 percent of all social media users do use Instagram (Brenner & Duggan. increasing brand loyalty and purchasing certain brands (Schiffman et al. 2013). 2013). 2013). most commonly a well-known person.

Two models were originally identified to explain the process of celebrity endorsement. Familiarity (target market is aware of him. celebrity is someone who is famous. irrespective of the required promotional role. 2. He is different). experienced and qualified in order to be perceived as an expert in the category. people . Relevance (which says that there should be a link between the endorser and the product as well between the endorser and the audience). Esteem (credibility to the mass). A person who exceeds certain numbers of followers can also be considered as Instagram Celebrity although they may not have any achievement. Differentiation (in all his projections. 2006). and yet he towers above them. is useful. thereto. he is seen to be one among the masses. especially in the entertainment business. As an endorser. 2006). namely. "any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement (marcoms). because when celebrities are depicted in marcoms. celebrity endorsement was thought to provide a distinct differentiation (Martin Roll. stature in the society or expertise in the field to the brand. one has to fulfill all the FRED objectives (Rajesh Lalwani. McCracken's (1989) definition of a celebrity endorser is. popularity. In a market with a very high proliferation of local.Endorsement is a channel of brand communication in which a celebrity acts as the brand’s spokesperson and certifies the brand’s claim and position by extending his/her personality. finds him friendly.4 Celebrity According to Cambridge Dictionaries Online. likeable and trustworthy). regional and international brands. celebrities chosen as endorsers should be knowledgeable. they bring their own culturally related meanings." Ohanian stresses that to be truly effective.

(Muda et al 2013).might simply just be attracted of the content of their Instagram.. Person is usually a pretty girl who posts a thousand pictures of her face or whatever food she's eating and may include pictures of other people's food (Urban Dictionary Online.. two related theories are described which are celebrity endorsement effectiveness under Ohanian (1990) measurement scale and celebrity and product congruence under the meaning transfer process theory of McCracken (1989). (p. there is a term “Instafamous” which is a person who's famous on the popular app Instagram because they have thousands of followers. 2012. aspiration. 301 & 303). 2012).. pp. 295-296). Schiffman et al. Also. According to Friedman & Friedman (1979) as cited in Phang & Ernest (n.301) defines celebrities as film stars. a celebrity refers to an individual who is known to the public.d. expert and trustworthy than non-celebrities (Ohanian. Celebrities are viewed as more credit. pp. Celebrities are hired because they are perceived to be more credible endorser of products compared to non-celebrities. increasing brand loyalty and purchasing certain brands (Schiffman et al.). Since the celebrity endorsement benefit to the market. 2012. In Instagram. 1990). The benefits that celebrity endorsement contributes to marketing are the influence on favorable word-of-mouth. most companies even large or small use celebrity endorsers to promote their brand and product. Therefore. A reference group is defined as a person or group of people who serves as a reference to an individual in forming values and attitudes. The newer or smaller organization gains higher awareness in a . This identification is based on admiration. empathy or on recognition. television personalities and popular entertainers and sports icons who give a common type of reference group appeal. reference groups provide individuals with a reference in their purchase or consumption decisions (Schiffman et al. or behavior.

2012). the company has to select celebrity whose characteristics maximize the sending message to target customers.short time by using well-known celebrities (Wheeler. From customer’s perspective. These views of trust identified so far consider trust to be a central function in the management of risk. they need to carefully selecting with three source factors which are source credibility. 2. is the extent to which one partner is genuinely interested in the other partner’s welfare and is motivated to seek joint gain. The second dimension of trust. celebrities turn an unknown product into a recognized product by persuading positive feelings toward advertising. According to Dickenson (1996) as cited in Hunter (2009). many studies have explored the relationship between trust and shopping behavior in online shopping context. Trust has been viewed as the perceived credibility and benevolence of a target of trust (Ganesan 1994. This definition of trust is relevant to the context of online shopping. an expectancy that the partner’s word or written statement can be relied on (Lindskold 1978). As a result.e the other party).168) stated that the characteristics of the celebrity affect the sales and advertising message of the company. 2003). Kumar. since Instagram can be considered as picture blog. The first dimension of trust thus focuses on the objective credibility of an exchange partner. and source power. source attractiveness. In recent years.5 Trust Trust is defined as perceived credibility and benevolence of a target of trust. (i. Scheer and Steenkamp 1995). p. risk is unmanageable and . benevolence. product information from various reference groups and personal media such as blog are needed to reduce transaction uncertainty (Hsu et al. indeed without trust. Belch & Belch (2003. When a company decides to use celebrity endorsement.

can be measured by increasing numbers of followers. Hagan and Choe (1998) investigated trust within the Japanese interfirm context. would not be possible (Morrison and Firmstone 2000). Interestingly. Previous studies on consumer behavior have indicated that reference groups influence consumers’ purchasing behavior (Bearden and Etzel. consumers usually depend on opinions or suggestions from others to evaluate purchases (Brown and Reingen. in Instagram case. 2. the theory of reasoned action (TRA) also suggests that an individual may develop beliefs by . Engel et al. They found that the higher level of sanctions which operated through both contractual and social relationships were key determinants of interfirm co-operation rather than higher levels of trust within the relationship. 1982.6 Perceived Usefulness of Celebrity Recommendation Usefulness is defined as “the degree to which a person believes that using a particular system would enhance his or her job performance (Hsu et al 2012). Childers and Rao. increasing online shop’s sales. this was not the case. 1999). To reduce risk and uncertainty in buying. 1993). increasing numbers of mentions. including adaptation.. Trust can also be viewed in the wider context of the cultural boundaries that exist.thus business relationship development. Kotler. Recommendations from such groups actually play an important role in consumers’ decisions particularly when purchasing expensive and/or new products and services is concerned. they conclude that whilst intuitively a higher level of trust may be expected to exist. Perceived usefulness would have effects on attitude and intention. Usefulness of celebrity recommendation. increasing numbers of likes. buying intention in this case. 1987. In addition. 1992.

Most contemporary perspectives on attitudes also permit that people can also be conflicted or ambivalent toward an object by simultaneously holding both positive and negative attitudes toward the same object. define an attitude as "a psychological tendency that is expressed by evaluating a particular entity with some degree of favor or disfavor.e. the use of categories for encoding information and the interpretation. for example. but there is a debate about precise definitions. This has led to some discussion of whether individual can hold multiple attitudes toward the same object. 2. attitude or consumer behavior refers to the actual purchase or use of the product. Consequently. It could be concrete. and gives testimonials about the products. these beliefs will influence individual behavioral intention. consumer behavior or attitude can be measured by whether the customer follows. abstract or just about anything in your environment. Behavior. discrete emotions or overall arousal) is generally understood to be distinct from attitude as a measure of favorability. judgement and recall of .7 Attitude Attitude in this context refers to consumer’s behavior. according to Mullen and Johnson (2013) is typically defined as an act or a response." Though it is sometimes common to define an attitude as affect toward an object. objects. and ideas. An attitude can be as a positive or negative evaluation of people. Eagly and Chaiken. activities. likes. affect (i. An attitude is an evaluation of an attitude object.Attitude may influence the attention to attitude objects.referring to information from or normative practices of a group and peers. In this context.. ranging from extremely negative to extremely positive. In Instagram. posts. events.

. 2004). Attitudes may guide attention and encoding automatically. Understanding whether a blogger’s reputation is a moderating variable is obviously important. the reputation of celebrity can be determined by the number of followers and likes on every post. we believe that bloggers with different level of reputations will influence readers’ perceptions of the respective contents differently. 2008. In fact. Hsu has compiled certain studies that empirically verified that reputation significantly affects trust or behavioral intention on online shopping. E-WOM communication refers to any positive or negative statement made by potential. or former customer about a company or product. Since blog posting is also a form of usergenerated content (UGC). Therefore. few studies have been conducted on whether reputation moderates the effects of hypothesized constructs. These influences tend to be more powerful for strong attitudes which are easily accessible and based an elaborate knowledge structure. However. In many studies. reputation has been mostly regarded as an antecedent of trust or behavioral intention. the influences of a “credible” blogger are different from a “not credible” one (Burgess et al. 2009). Keh and Xie.8 Reputation In Instagram. For . 2009. 2. even if the individual is pursing unrelated goals. which is made available to a multitude of people and institution via Internet (Teng. these studies empirically verified that reputation significantly affects trust or behavioral intention (Casalo et al. actual.. Needless to say that a company would be more attracted to endorse on a celebrity that has bigger and better reputation on Instagram rather than the one who is not famous enough.attitude-relevant information. Koufaris and Hampton-Sosa. et al 2014).

Analysis of buyer behavioral intentions in the context of electronic procurement provides another example. Chau and Hu found that TAM to be superior to TPB in its ability to examine physician acceptance of telemedicine technology. shipping charges. while the individual theoretical models have their own distinct advantages. suspicious learners – is reluctant to purchase online as they are lack of computer training. 2. They also stated the eight online shopper segments based on online attitudes. The theory of comparison approach provides a helpful method of predicting information technology (IT) usage behavior and intention. through a normative effect. a highly reputable blogger may become an opinion leader influencing others to shop online. shopping avoiders – like to see the merchandise in person before buying. adventurous explorers – require little special attention by Internet vendors as they believe online shopping is fun. fun seekers – see entertainment value in the Internet but are afraid of buying things online. For example. . fearful browsers – love “window shopping” but are afraid about credit card security. 2010). business users – use the Internet primarily for business purposes and do not view online shopping as novel. technology muddlers – spend less time online.example. which are shopping lovers – enjoy buying online and do so frequently. and buying products sight unseen.9 Intention to Shop Online Internet marketers have been particularly concerned about their ability to simulate direct experiences for products in a virtual context (Hawkins and Mothersbaugh.

10. this study redefined the usefulness as “the degree to which an Instagram users believe that adopting a celebrity’s recommendation would enhance their online shopping performance”. TPB. and decomposed TPB model) are roughly equivalent in terms of their ability to explain and predict user acceptance of new technology. However. Furthermore. 2.10. 2. Previous research has empirically confirmed that perceived usefulness has significant effects on attitude . before going to the test. TPB. theoretical foundation behind the relationship is elaborated to shows effect of one variable towards another. Gentry and Calantone recommended TAM as superior to the TRA and TPB models in its ability to predict buyer behavioral intentions. current work treats usefulness as perceived usefulness of celebrity’s recommendations. and decomposed TPB model) can help understand consumer intentions to shop online. this study suggests that simultaneously testing the three competing models (TAM. Hence.Moreover. and intention to shop online. Usefulness is defined as “the degree to which a person believes that using a particular system would enhance his or her job performance” (Davis.1 The relationship between perceived usefulness toward celebrity’s recommendation. Hence. Another example has demonstrated that the three models (TAM. online shopping is similar to general Internet-based IS that have a significant impact on individual decision-making behaviors and Internet marketing strategies. very limited empirical research has been performed to examine and compare the validity and explanatory utility of prevalent intention-based theories in the context of online shopping. 1989). Relationship between variables This research aims to test how significant the influence of the one variable to another. attitude. Therefore. In the context of blog.

H2c.3 The relationship between celebrity’s reputation. Trust will positively affect Instagram users’ perceived usefulness. Lin and Lu. Trust will positively affect Instagram users’ attitudes toward online shopping Trust will positively affect blog readers’ intentions to shop online. Perceived usefulness of celebrity’s recommendation will positively effect Instagram users’ attitude toward online shopping. perceived usefulness. attitude. studies such as Lim et al.10. (2000). these studies empirically verified that reputation significantly . well-known theories such as TAM. Accordingly. Moreover. intentions. 2005). (2006 and Hsiao et al. For this study. the results of those studies being consistent with those obtained in an earlier study by Jarvenpaa et al. (2010) also noted that trust positively influences attitude and shopping intention. the following hypotheses were proposed: H1a.. trust. attitude. 2005). past studies had empirically verified that trust significantly affected the attitude (Suh and Han. H1b. and perceived usefulness toward celebrity’s recommendation (Moderator Variable) In many studies. H3. Accordingly. reputation has been mostly regarded as an antecedent of trust or behavioral intention. Empirical studies based on these theories have found that attitude positively affect an individuals behavioral intention (Hsu and Lu.. TRA and theory of planned behavior (TPB) also indicate that the individuals’ behavioral intention is influenced by their attitude toward the concerned behavior. 2. Furthermore. Perceived usefulness of celebrity’s recommendation will positively affect Instagram users’ intention to shop online. the following hypotheses were proposed: H2a. 2. we propose that trust will positively affect Instagram users’ attitudes toward online shopping and behavioral intention to shop online. Kim et al. 2009).10.2 The relationship between trust. Similarly. we define the attitude as the degree of an Instagram user’s positive feelings about online shopping. H2b.and intention (Hsu and Lu. 2000. 2007. Instagram users’ attitudes toward shopping online will positively affect their intention to shop online. Yu et al. In fact. Therefore. 2002. Wu and Chen. 2004. and intention to shop online.

affects trust or behavioral intention (Casalo et al. Keh and Xie. the following hypothesis was proposed: H4. 2001). Moreover. This web site source effect is likely to be applied to Instagram context.. a persuasive message will influence the Instagram users’ confidence on a specific product/service (Shamdasani et al. 2004). Therefore. Therefore. Since blog posting is also a form of usergenerated content (UGC). 2009. a highly reputable blogger may become an opinion leader influencing others to shop online. this research derives a Perceived usefulness of Celebrity’s recommendations model adopting from Hsu et al (2012): Attitude Trust Intention to shop online .11 A celebrity’s reputation will affect the all the hypotheses relationships. 2008. the influences of a “credible” blogger are different from a “not credible” one (Burgess et al. we believe that bloggers with different level of reputations will influence readers’ perceptions of the respective contents differently. Empirically. 2. Koufaris and Hampton-Sosa. Instagram confidence brought about by a credible celebrity might influence the e WOM posted on Instagram page. Based on the recommendation by the source. Park and Lee (2009) stated that the web site reputation has significant impact on the eWOM effect. few studies have been conducted on whether reputation moderates the effects of hypothesized constructs. Their study revealed the eWOM effect is grater for web sites with established reputations than for less established web sites. Conceptual Model Celebrity’s reputation (as a moderator) Based on the relationship shown through propositions mentioned earlier. However. For example. through a normative effect... eWOM platform such as Instagram to which the review is posted can be a potential factor in influencing customers’ product judgement (Lee and Youn. 2009). 2009).

files.wordpress.pdf Celebrity viewed 2 september 2015 .id/books? id=38ccBQAAQBAJ&pg=PR24&dq=principle+of+marketing&hl=en&sa=X&ved=0CDMQ6A EwBDgUahUKEwiQjoGi3-fHAhVPCY4KHTU-Cqk#v=onepage&q=principle%20of %20marketing&f=false https://vinsontech.Figure 2.1 Proposed Research Model Source: Replication from Journal of Hsu et al (2012) (marketing) viewed 2 september 2015 Principles of Marketing: A Value-Based Approach (Gbadamosi et al 2013) https://books.com/2012/04/principles_of_marketing_2814th_edition29.co.google.

org/dictionary/english/celebrity http://www.wewanttraffic. 2015.books.co.smartinsights. An Experiment: Instagram Marketing Techniques and Their Effectiveness viewed 6 september 2015 ATTITUDE B Mullen.http://dictionary.php?term=Instafamous Instagram Ashley Ha.google.urbandictionary.cambridge.aspx .google.com/define.com/emarketing/advantages.com/digital-marketing-strategy/online-marketing-mix/definitions-ofemarketing-vs-internet-vs-digital-marketing/ The Psychology of Consumer Behavior page 4 https://books.com http://www.id/books? hl=en&lr=&id=J8poXxXB8kYC&oi=fnd&pg=PP1&dq=consumer+behavior&ots=oFdynl_902 &sig=XtxZ8xsvlUDI7D_4ppiPoUZko18&redir_esc=y#v=onepage&q=consumer %20behavior&f=false viewed 6 sept 2015 http://www.2013 . C Johnson .