The Effect of E-Reviews on Consumer Behaviour – An Exploratory Study on Agro-Tourism

The advancement of information technology has caused substantial repercussions in almost all global markets (De Valck et al. 2009), thereby leading to a “renegotiation of the relationships between companies and consumers” (Kucuk and Krishnamurthy 2007). The web 2.0, i.e., a varied range of internet-mediated communication tools, such as blogs, wikis, chat rooms, interactive web sites etc., has particularly empowered customers since they may signal and disseminate information about consumption experiences, creative ideas to other like-minded people. This situation constitutes a natural selection process within markets: only those firms who are able to tailor their marketing-mix by taking into account this empowered role of consumers will remain competitive. Kucuk and Krishnamurthy (2007) identified online strategies adopted along the supply-chain that positively affect the consumer in all relevant steps of the decision-making process. One of those branches of economic activity where web 2.0 technologies have changed market dynamics most profoundly is travel and tourism. On the supply side, the provision of freely accessible authoring tools has allowed the transition from static to dynamic tourism web sites (Fuchs and Höpken 2011). On the demand side, travel and destination information consists increasingly of user generated content which is often also referred to as online word-of-mouth (e-WOM) (Litvin Goldsmith and Pan 2008). One way to classify the typologies embraced by the notion of e-WOM takes into account the number of subjects involved in the communication process: accordingly, for instance, e-Mails usually belong to the one-to-one e-WOM (i.e., one sender and one recipient), whilst online product evaluations or e-reviews (i.e., ratings and reviews; Gretzel and Yoo 2008) fall into the category of one-to-many e-WOM (i.e., one sender and many receivers). Finally, many-to-many e-WOM (i.e., several senders and receivers) implies that many users interact with each others, such as in the case of chat rooms (cf., Fuchs and Höpken 2011). With respect to customer heterogeneity, the mentioned typologies mirror individuals’ differing preferences when it comes to choosing the most appropriate medium, both to search for and to disseminate e-WOM (Allsop et al. 2007). In order to improve the match between customer types and e-WOM media, several studies have analysed diverse facets of e-WOM based on socio-demographic data (Pan et al. 2010, Allsop et al. 2007), cognitive and affective dimensions, such as personal motives (Hennig-Thurau 2005), as well as preference elicitation patterns (Gretzel and Fesenmaier 2006). Moreover, in order to demonstrate the significance of e-WOM in tourist marketplaces, Xiang and Gretzel (2010) have shown the growing relevance of e-WOM disseminated through social media, particularly during the information search phase. By contrast, Pan et al. (2007) identified travel blog monitoring as a cost-effective marketing method for destination managers. Finally, Vermeulen and Seegers (2009) have analysed the role of e-reviews in increasing both the awareness of and the formation of (positive) attitudes towards hotels. The present research also focuses on the analysis of e-reviews of holiday accommodation, however, its scope differs from previous contributions in the following aspects. Firstly, the proposed approach is mainly centred on the phenomena of trust formation in e-reviews. There is anecdotal evidence that users consider sources of e-WOM as being relatively trustworthy, although most of this information is anonymously posted on the web. Nevertheless, this issue has received surprisingly little attention in the literature so far. Secondly and strictly connected to the former aspect, by using trust in e-reviews as an explanatory variable, we analyse the impact of e-reviews on the customer’s decision to book accommodation. Thus, in contrast to previous studies with the focus on the impact of e-reviews on consumers’ booking decisions (cf., Vermeulen and Seegers 2009), we attempt to assess the extent to which trust in e-reviews can ease the booking process of accommodation packages. More precisely, this study has two foci: (a) to explore the determinants that make anonymously posted e-reviews be perceived as trustworthy and (b) to assess the impact of trust in e-reviews on consumers’ decision to book accommodation. These goals will be reached by drawing on empirical work in the context of farm tourism in Germany. We will use the terms ‘farm tourism’ and ‘agro-tourism’ interchangeably to indicate “all tourism and recreation activities connected with a […] farm or any agricultural, horticultural, fishery or agribusiness operation” (Phillip et al. 2010, Przezbórska 2003). In Germany, farm tourism is currently offered by around 25,000 farm operators and generates a yearly turnover of € 943 million (BMELV 2006). Mostly in the form of small and medium sized enterprises (SME), farm operators typically enter into this business with the motive to create additional income and occupation for family members. Similar to other countries, in Germany SME management often suffers from a shortage of tourism-related business knowledge (Huang 2006) which in turn leads to entrepreneurial restrictions particularly regarding innovations, product development and strategic planning (Veeck et al. 2006: 246). For instance, although the problem of infrastructural digital divide is not as serious as in other countries (i.e., almost all German farm operators have the necessary infrastructure to connect to the Internet and even possess their own web site), only a restricted number of suppliers so far has implemented web 2.0 technologies to improve the marketing effectiveness of their facility (Sidali 2009). Thus, a cultural digital divide is the problem for the majority of farm tourism operators who often ignore the benefits of adopting web 2.0 applications (Huang 2006, Hegarty and Przezborska 2005). In the same way that offline word-of-mouth has been traditionally one of the most successful ways of promoting farm tourism (Lemke 2003), it seems highly plausible that web 2.0-based applications offering e-WOM functionalities could be similarly effective. Moreover, they would help farm managers to cope with the perennial “lack of monitoring and evaluation of advertising effectiveness, [which] is one of [the] main weaknesses in farm operators’ promotional strategies” (Clarke 1996: 612). Reports of best practice corroborate these assumptions: Adams (2008) shows various ways to implement web 2.0 applications in a farm context in the USA. Moreover, farm tourism operators in Italy have started to promote their facilities by using online travel platforms, such as www.turismoitaliano.it and www.agriturismo.it. The latter platforms not only host farmers’ addresses and product descriptions, but similarly to the situation for international hotel chains (Fuchs et al. 2009), they also include online reviews continuously posted by farm guests (Severini 2008). However, despite these innovative examples from the US and Italy, farm tourism operators in Germany are still predominantly reluctant to let consumers evaluate their facilities and related service offers. Moreover, also from an e-business readiness standpoint, web 2.0 applications may represent challenges for many operators who, especially in the agricultural sector, can typically be described as “laggards” when it comes to technology adoption (Rogers 2003, Collecchia 1999 in: Fuchs et al. 2009). The situation is exacerbated by the fact that sector specific demand studies on tourist behaviour are often outdated to infer whether farm guests show a different behaviour towards web 2.0 tools than other tourist segments (Lüdke 2001). However, this information is necessary for upcoming investment decisions concerning web 2.0 technologies. Consequently, farm tourism operators are showing a systematic lack of knowledge about the net-benefits of implementing Internet technologies. Hence, in addition to the two research objectives mentioned above, we finally will test (by means of a group comparison approach), whether there are significant differences between farm tourists and non-farm tourists. The remainder of this contribution is organized as follows. Section 2 presents the theoretical framework by showing the determinants behind trust building processes related to e-reviews as well as the expected impact on consumption behaviour (i.e., accommodation choice). Section 3 discusses model testing on the base of survey data gathered by 216 respondents from Germany. Section 4 discusses the obtained findings across groups (i.e., farm tourists versus non-farm tourists). Section 5 deduces several managerial implications. Finally, the conclusion section sketches the agenda of future research with respect to web 2.0 technologies and niche suppliers, such as farm tourism.