PHD Dissertation Proposal Topic:

Online Social Network, Promotion Sites

and Purchase Intention. A case study in

Vietnam

Hoang Thanh Nhon

School of Business

International University, Vietnam National University

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Table of contents:

1. Introduction……………………………………………………..3

2. Research Questions……………………………………………..8

3. Theoretical Backgrounds………………………………………11

3.1 The S-O-R framework……………………………………………11

3.2 Technology Acceptance Model (TAM) ………………………….12

4. The Purpose of My Study………………………………………13

5. Conceptual Model………………………………………………14

6. References………………………………………………………14

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I. Introduction:

The boom of the online social network (OSN) use help e-marketers diffuse advertising (Ad)

information at faster speed than traditional marketing tools. Many e-commerce sites utilize OSNs

as an effective word of mouth (WOM) tool at which consumers, themselves, may transmit

product information and consuming experiences to their online friends in OSN. OSN, a virtual

community, introduces new paradigm for online communication among its member [1]. OSN

also providing a mechanism allows OSN member to create online profile, postings and

comments, so, other members may learn online friend’s lives without chatting to them.

Therefore, this “passive learning” of friends’ profiles, photos, or new stories allows people to

manage much larger social circles than those they directly communicate with [2]. Through these,

participants may make their own network relationships by keeping in touch with existing friends

or meeting new people they make their online network relationships. With the boom of OSNs,

many retailers integrated their business with OSNs, and, Marsden developed new e-commerce

concept, social commerce [3]. He defining social commerce is the subset of e-commerce in

which online retailers take advantage of OSN’s relationship networks to diffuse Ad information

to potential customers. In other words, social commerce is the use of social network in the

context of e-commerce transactions in which Social promotion (SP) or group-buying (GB) site or

the deal-of-the-day website featuring discounted gift certificates usable at local or national

companies, a type of social commerce, is most popular. Currently, Groupon is the largest GB site

in America. Groupon was launched in November 2008 and the first market for Groupon was

Chicago. So far, Groupon has served more than 150 markets in North America and 100 markets

in Europe, Asia, and South America, and had 35 million registered users. In Vietnam, The first

SP sites were developed in 2010, so far, it is said that this business model has been changing the

consuming style in young generation in large cities, especially in Ho Chi Minh city. However,

due to fierce competition, the number of market participants with 100 sites in the period of

2011-2012, declined dramatically to few dozen among which hotdeal.com, nhommua.com and

cungmua.com are prominent names are holding 90% of market share [4]. So, What is SP or GB

or the deal of the day site ? The promotion deal site is an online marketplace at which many

various seller offers discounted services or products to consumers. However, such promotion is

valid only if a certain minimum number of customer buy the deal. The Ad information of deal

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spreads virtually through OSNs on a daily basis as OSN members encourage online friends to

access these deal information, so that the deal becomes available to all. The below figure will

describe the operation mechanism of a social commerce site :

Figure 1. Social promotion (commercial) process

As shown in Figure 1, social commercial sites always update seller’s promotion deals and

consumers gain information from social commercial sites, then make buying decision and share

to online friends.

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Customer is also a OSN member

Commercial sites

Promotion sharing

Purchase Decision

Promotion sharing

GainInformation

This figure below is an Ad information of Hotdeal.com posted on Facebook

Figure 2 : The consumer gain posted information on social dealer and choose optional activities.

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Click on “ MUA NGAY” or “Book Now” to make Purchase

Decision

Click on “Like” and “Share” to spread virtually posted Ad

information to online friends

Figure 3. If I click “Like” your online “closed” friend will see this Ad post. If you click on

“Share” 100% of your online friends will see Ad post.

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Click on “Like”, the “You” will appeared on your Facebook page, it means that you are sharing this post information to some online friends.

Figure 4: This illustration is appeared only if OSN user click “book now”

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369 persons purchased until now

More 1 day, 1 hour and 8 minutes and 16 seconds

remaining

The original price is 5.460.000, the discounted price

is 1.750.000 VND. The purchaser will be discounted

68%

II. The Research Questions

In prior researches of the social commerce in developed countries proved that social

commerce make consumer’s collaboration easier, make more rational buying decision and make

the shopping focused on consumers instead of products by using the OSN [5]. However, in an

emerging market like Vietnam, there are some distinctive features that have not been explained

and need to be discussed. The first feature I would like to mention here is price discount. In

unstable and turbulent market, when the customer does not have much information about the

product quality, is price leverage (price discount), especially in high inflation period of 2010-

2012, critical factor influencing to customer’s purchase decision ? Therefore, 20,30, 40 or even

more than 50% discount on price is really attractive offer. For Vietnamese consumer with

average or middle income, it is an valuable opportunity to be served or bought a high quality

service or product with rational or reasonable price. The focal advantage of the SP sites lies in

higher discount rate to attract higher volume of buyer. In other words, high discount rate creates

crowd psychology in transactions in GB site [6]. Therefore, attracting the large group of potential

customers of SP vendors will be depended on how are they able to negotiate with product or

service providers. Moreover, Internet is now great channel help consumer for searching good

price. This is also a high pressure on GB sites in dealing sellers. Therefore, the first question I

would like to find the answer through empirical experiment is:

” Is Price leverage a main or important determinant of customer’s purchase intention in an

online group-buying site and is price leverage positively associated with buyer volume( or

create crowd psychology) ? “.

Apart from price discount issue, the number of purchaser also attracts potential customer,

because, the larger number of participant in purchase, the “safer” the customer may feel to buy.

This is second distinctive feature that I need to explain in my research. This can be explained by

crowd psychology. Yang and Mao said :” Crowd behavior is heavily influenced by the loss of

responsibility of individual crowd members and the impression of universality of behavior [5].

Classical theories in crowd psychology indicate that crowds foster anonymity and sometimes

generate emotion ”. Convergence theory holds that crowd behaviors is not the crowd itself, but is

carried in to the crowed by particular individual [5]. Therefore, crowd size can be utilized to

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appeal other individuals to join in the group. In such reasoning, GB vendors can take advantages

of the group volume to attract more potential customers. Hence, the second question I would like

to mention in this thesis is :

“Is crowd effect is important factor influencing to customer’s purchase decision in social

promotion sites ?”.

However, the third research question raised is that:” Are the attractive discount rate and the

effect of buying-group size enough to build the customer’s trust on promotion sites ?”.

In addition to price leverage and crowd effect factors, I would like to expend my discussion to

the influence of the social network characteristics and other social factors, especially social

interaction, on building up the customer’s trust and make crowd psychology in social network.

Some prior studies proved that online social network is a convenient environment for social

interaction activities. Zhe and Chenyan defined social interaction as the followings: Social

interaction is a dynamic interdependent process of information diffusion between an member and

other member in group, member and group, or a group with other group [7]. In Vietnam, with

young population, it is likely that young consumer tend to be influenced by online social

interaction, word of mouth (WOM), with others to make purchase decision. In other words, when

customer faces decisional uncertainty, they can ask online other friends or observe the crowd

actions in online environment; doing so may help them readjust their evaluation and make

decision. Therefore, information sharing and sign of crowd psychology affects consumers’

judgments. In recent years, online social interaction intensity is increasing by the boom of OSN

sites, so, the fourth question is raised in my proposal is :” What do OSN characteristics support

social interaction as well as indirect impact on customer’s trust, then, purchase intention ?”

The first OSN characteristic I would like to mention is network density. Network density is

defined as the degree of connection of all the members. If all members are interconnecting with

each other, it will have the highest density [8] .There are three characteristics of such dense

network referred by Son. First, high density can make many channels to collect and diffuse

information very fast. Second, due to fast diffusion and collection of information source, so,

network density can make high degree of social interaction among network participants. Third,

the bad evaluation about a member will be delivered to all members if that individual transmit

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information with poor and untrusted information in network, so, that individual will consider

carefully before he/she diffuse information in such high dense network. Therefore, this

characteristic may help to establish reliability and positive mutual communications among

network participants.

The second OSN characteristic is Network Centrality. Centrality indicates the degree to

individual’s central position in a network. A network member who is in a position that has many

direct connections with other members should see himself or herself as central information

channel. A central agent occupies prominent position may influence information flows or

behavioral expectations among other agents [8]. Based on the prior researches of Rowley and

Freeman, a person in central position can gain information easily and deliver information quickly

and have more influential than others.

The last characteristic is Homophily. Homophily is group composition in terms of similarities of

members in Network. Individual in homophily relationships share common characteristics such

as beliefs, values, educations or any socio-demographics that make communication and

relationship formation easier. The similarities of individuals leads to a greater level of

interpersonal attraction, trust and understanding, and, consequently, to greater levels of social

affiliation than what would be expected among dissimilar individuals.

In addition to questions mention in above, I also wonder that whether the feeling comfortable in

OSN and GB site is the important factor. Therefore, I raised another question:

“How does the perceived ease of use (PEOU) of OSN influence on the degree of social

interaction, then trust?”

Fred Davis defined PEOU as “the degree to which a person believes that using a particular

system would be free from effort” [9]. In IT research, PEOU is employed frequently to be factor

influencing user’s behavioral intention. An individual with high PEOU of OSN will reduce

mental and physical effort in searching production information or consuming experiences.

Therefore, OSN members feel comfortable on social interaction activities such as chatting,

comment on postings. In addition to the PEOU of OSN, the high PEOU of SP sites also induce

customer’s willingness to accept these sites, so they are less inclined to search or look for

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additional information in other SP sites. Therefore, the higher degree of PEOU may result the

higher level of trust on IT system.

Additionally, Wang and Benbasat have argued that PEOU increase trust. PEOU

demontrates that the vendor have dovoted extra energy and extended effort in designing the

website, which means then vendor care about customers’ feeling [10]. Conversely, may perceive

difficult to use sites as less considerable and less capable, and therefore, they may lower their

trust to the vendor.

The last question I wouldlike to mention is : “How does the reputation of promotion sites

affect the trust of customer on these sites ?”

Yoon, Guffey and Kijewski argued that company’s reputation and its service offering

determine buyer’s decisions. Company’s reputation helps create expectations about an offering

among potential buyers [9]. The higher reputation perceived by customer, the better expectations

formulated in customers’ mind. Therefore, customer has more likely to participate in SP sites to

search more products and conduct purchase on this website. Additionally, high perceived

reputation also mitigates perceived uncertainties to the products provided by the vendor [10].

Therefore, it decreases customers’ concern in shopping from current vendor, which increase in

trust, then, increase purchase intention.

III. Theoretical Backgrounds:1. The S-O-R framework:

This research attempts to develop an in-depth understanding of how online social network

structure characteristic influence individuals’ responses to the GB sites’ deal recommended by

their online social network friends. To do so, the c will be discussed first. The S-O-R framework

posits that environmental cues act as Stimuli (S) that affect an individual’s cognitive and

affective reactions, which in turn, affect behavior [12 & 13]. Organism (O) refers to the

individual’s cognitive and affective states. And, Response (R) includes nonverbal response and

verbal response. Behavior responses like acquisition, usage belong to this realm [13]. Following

the S-O-R framework, in this study, we consider S as the OSN characteristics (network

centrality, network density and Homophily), Price Discount, O as Customer’s liking, positive

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feelings and trust and R as the purchase intention or purchase decision of the recommended deals

by online social network friends.

2. Technology Acceptance Model (TAM):

The Technology Acceptance Model (TAM) is an information system theory that models

how users come to accept and use a technology. TAM suggests that the effects of external

variables (system characteristics, development process, training) on intention to use are mediated

by perceived usefulness and perceived ease of use (PEOU) [14]. It was first formulated with an

attempt to interpret why people accept and reject information systems. During the past few years,

the information systems community considered TAM a parsimonious and powerful theory. TAM

was employed in different technologies (e.g. email, word processor, hospital Information

System) in diverse situations (time and culture) with different control factors (e.g. geographical

information, personal information) to different subjects. In my study, I adopt PEOU as

antecedent of Trust on SP sites as well as of Purchase Intention.

IV. The purpose of My Study:

The researches on the relationships among OSN, SP site and Customer’s purchase intention has

not been new in western or developed market since 2008. However, in Vietnam, the social

commerce topics have not been explored. The consuming behavior and culture in Vietnam is

different from those in developed countries. In addition, in Internet era and the booming OSN

has large impact on Vietnamese consumer behavior, even, create new consuming styles.

Therefore, in my study, I would like to research the relationships among OSN, OB sites and

Customer’ purchase intention. I hope that my study will have contributions on theoretical and

practical implication.

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V. Conceptual Model: Drawing From the summary of the research questions and theoretical backgrounds, I build up

a conceptual model :

VI. Research hypotheses: From the conceptual model I proposal following hypotheses :

H1: Higher Price Discount will lead to higher purchase intention in SP sites

H2: The degree of Crowd Effect (Crowd Psychology) will have positive relationship with

purchase intention in SP sites

H3: PEOU of the SP site is positively associated with the trust in SP sites

H4: PEOU of the SP site is positively associated purchase intention in SP sites

H5: Customer’s Perceived SP reputation is positively associated with the trust in SP sites

H6: Customer’s Perceived SP reputation is positively associated with the trust in SP sites

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H8

H10

H12H11

H9H7

H1333

H14

H3

H5

H6

H4

H15

H2

H1

Perceived SP site’s Reputation

PEOU

Purchase Intention

Homophily

Network Centrality

Network Density

Crowd Effect (Crowd Psychology)

Price Discount (Price Leverage)

Trust on SP sites

Social Interaction on

OSN

H16

H7: The network Density is positively associated with the degree of Crowd Effect (Crowd

psychology)

H8: The network Density is positively associated with the frequency of the social interaction on

OSN

H9: The network Centrality is positively associated with the degree of Crowd Effect (Crowd

psychology)

H10: The network Centrality is positively associated with the frequency of the social interaction

on OSN

H11: The Homophily is positively associated with the degree of Crowd Effect (Crowd

psychology)

H12: The Homophily is positively associated with the frequency of the social interaction on OSN

H13: PEOU of OSN site has positive relationship with the social interaction on OSN

H14: Social Interaction on OSN has positive effect on the degree of Customer’s trust on SP sites

H15: Customer’s trust in SP site has positive effect on the purchase intention in SP site

H16: The Price Discount is positively associated with the level of crowd effect.

VII. References:[1] Murray, K. E & Waller, R. (2007) Social networking goes abroad, International Educator,

16(3), pp. 56-59

[2] Buke, M., Krersaut, R. E, & Marlow, C. (2011). Social Capital on Facebook : Differentiating

uses and users. Proceedings of the 29th international conference on human factors in

computing systems (CHI’11), Proceedings of the 2011 annual conference on Human factors

in computing systems, 571-580. ACM. doi: 10.1145/1978942.1979023

[3] Marsden, P. (2009) Simple Definition of Social Commerce (With Word Could & Definitive

Definition List) Available at http:// socialcommercetoday.com/social-commerce-definition-

word-cloud-definitive-definition-list (accessed November 17,2009).

[4] Anh, Q. (2014, April 7). Group Buying Market Share. Vnexpress.net. Retrieved April 17,

2015, from http://kinhdoanh.vnexpress.net/tin-tuc/doanh-nghiep/cuoc-doi-ngoi-tren-thi-

truong-mua-theo-nhom-2979087.html

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[5] Yang, L & Mao, M. (2014). Antecedents of Online Group Buying Behavior: From Price

Leverage and Crowd Effect Perspectives. Journal of Human-Computer Interaction, 24(7),

700-721

[6] Freud, S. (1955). Group psychology and the analysis of the ego. The Standard Edition of the

Complete Psychological Works of Sigmund Freud, Volume XVIII (1920-1922): Beyond the

Pleasure Principle, Group Psychology and Other Works (pp.65-144).

[7] Zhang, Z. & Gu, Chenyan (2015) Effects of Consumer Social Interaction on Trust in Online

Group-Buying Contexts: An Empirical Study in China, 16(1)

[8] Park, M-S, Shin J-K & Ju Yong (2014). The Effect of Online Social Network

Characteristics on Consumer Purchasing Intention of Social Deals, Global Economic

Review: Perspectives on East Asian Economies and Industries, 43(1), 25-41

[9] Davis, F.D (1989). Perceived usefulness, perceived ease of use, and user acceptance of

information technology. MIS quarterly, 319-340

[10] Wang, W., & Benbasat, I. (2005). Trust in and Adoption of Online Recommendation

Agents. Journal of the Association for Information Systems 6(3).

[11] Yoon, E., Guffey,H.J., & Kijewski,V. (1993). The effects of information and company

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228

[12] Mehrabian, A. & Russell, J.A. (1974) The basic emotional impact of environments,

Perceptual and Motor Skills, 38(1), pp. 283-301

[13] Jacoby, J. (2002) Stimulus-organism-response reconsidered: An evolutionary step in

modeling (consumer) behavior, Journal of Consumer Psychology, 12(1), pp. 51-57.

[14] Venkatesh, V., & Davis, F.D. (2000). A theoretical extension of the technology acceptance

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