International Journal of Business and Management Invention

ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X

www.ijbmi.org Volume 3 Issue 1ǁ January. 2014ǁ PP.22-29

The Effect of e-WOM on Destination Image,

Satisfaction and Loyalty
Putu Yudi Setiawan,
Eka Afnan Troena, Armanu, Noermijati

ABSTRACT: The objective of this research was to examine the causal relationships among eWOM,
destination image, satisfaction and loyalty. A structural model consisted of those variables were developed
based on literature review. This model was analyzed using Structural Equation Modeling (SEM). Sample of
150 domestic tourists were collected in major tourism destinations around Denpasar – Bali. Measurement
items were adapted from existing scales found in marketing literature. The result indicates that eWOM has a
significant direct effect on destination image, while it’s indirect effect on satisfaction and loyalty are
completely mediated by destination image. The findings offer important implications for tourism marketing
theory and practice.

KEY WORDS: eWOM, destination image, satisfaction, loyalty, mediation

I. INTRODUCTION
Word-of-mouth communication (WOM) has long been regarded as a very important topic for
researchers and practitioners in the field of marketing (Gruen et al., 2005). Some researchers consider WOM
to be a strong and credible influence on consumer behavior (Gupta & Harris, 2010). A similar view was
expressed by Litvin et al. (2008) which emphasize how powerful the influence of WOM in inducing the
action taken by the customers. WOM is also a type of information most often searched by people who have
an affinity for traveling. Recommendations such as these are considered as a source of the most reliable
information for potential tourists (Chi & Qu, 2008).Today, the spread of WOM takes place not only through
conventional means. In particular, the internet has evolved into a resource or means where the electronic
communication for the Word-of-Mouth (eWOM) takes place among the customers (Hennig-Thurau et al.,
2004). As with any WOM, the existing studies show that eWOM has a higher credibility, empathy as well as
relevance for the customers when compared to the resources, which are created by marketers through their
websites (Bickart & Schindler, 2001).eWOM is defined as either a positive or negative statement made by
potential, current and former customers, about a product or company, which is intentionally made to be heard
or seen by a lot of people and institutions through the internet media (Hennig-Thurau et al., 2004) .
Meanwhile, there are four things that differentiate between the eWOM and traditional WOM. First, the spread
eWOM is faster and wider. Second, eWOM communication is more persistent and more accessible. Third,
eWOM communication is measurable. Finally, the electronic properties of eWOM in most of its applications
can reduce the ability of the receivers to assess the credibility of the senders and the messages they send
(Cheung and Lee, 2012).

By scrutinizing the development of the research done by Sundaram et al. (1998) regarding the
motives of WOM communication, Hennig-Thurau et al. (2004) conducted a study on the motives of eWOM.
In his analysis, Hennig-Thurau et al. (2004) found that the factors determine the primary motivation for
consumers to spread eWOM, is because of the social benefits, economic incentives, concern for others, as
well as self-enhancement / extraversion. Of these four factors, social benefits have the greatest
influence.Although WOM has been declared as the most important source of information in destination image
formation (Baloglu & McCleary, 1999), not many studies that specifically analyze the influence of eWOM on
the destination image have been conducted. Some research on the impacts of eWOM, mostly analyzed the
influence of eWOM on the customer loyalty (Kim et al., 2004; Gruen et al., 2006), in which each study also
relates it to the value of the customer (Gruen et al., 2006 ) and the decision to purchase (Kim et al., 2004).
While on the other hand, Zhang et al. (2010) analyzed the the influence of eWOM on the popularity of a
restaurant. The study analyzed the relationship between the satisfaction of the information on the internet with
the satisfaction at the tourist destinations that have also been carried out by Castaneda et al. (2007). However,
studies that specifically link between eWOM and the the satisfaction on the destination image is still very
limited. Based on this fact, this research seeks to analyze the influence that can be generated by eWOM on
the destination image, the satisfaction and loyalty, either directly or indirectly.

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II. LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK

The research of Baloglu & McCleary (1999) states that WOM is a source of information that can
affect the formation of a destination image. While WOM in a more specific form, namely eWOM, expressed
by Jalilvand & Samiei (2012) has an influence on brand image and purchase intention. However, because no
studies have explicitly stated that eWOM may affect the destination image, a proposition was composed by
using the logic of syllogism. In this case, the major premise is : "the source of information may affect the
destination image" (Baloglu & McCleary, 1999). While the minor premise is: "eWOM is a source of
information". The second statement is based on a study on 'the dynamic theory of knowledge creation'
proposed by Nonaka et al. (2000). So therefore, the conclusion can be drawn that eWOM may affect the
destination image. This conclusion is used as the basis for preparing a proposition as follows:

P1: eWOM affects the destination image significantly and positively.

According to Castaneda et al., (2007), the higher the satisfaction of the tourists with the Internet, the higher
the satisfaction with the tourist destinations they visit. This is because the Internet provides more information
needed by tourists, so it enables them to plan their trips well to meet their needs and expectations.
Accordingly, the following hypothesis can be made/set up/arranged.
H1: eWOM affects satisfaction significantly and positively.
Gruen et al. (2005) found that eWOM (Customer Know-How Exchange) influence customer’s perception of
product value and customer loyalty that is represented by the intention to recommend the product to others.
Thus the hypothesis can be arranged as follows:
H2: eWOM affects loyalty significantly and positively.
The result of the research conducted by Chi and Qu (2007) states that the destination image directly affects
attribute satisfaction. In addition, destination image and attribute satisfaction also directly affect the overall
satisfaction. Consequently, the overall satisfaction and the attribute satisfaction positively and directly affect
the destination loyalty.
Meanwhile, Prayag (2009) and Prayag and Ryan (2011) state that the destination image, the personal
involvement and the place attachment, affect the visitor loyalty (revisit and recommendation), that is
mediated by the variable satisfaction. So, from the above facts, the hypothesis can be arranged as follows:
H3: The destination image affects satisfaction significantly and positively.
H4: The destination image affects loyalty significantly and positively.
H5: The satisfaction affects significantly and positively on the loyalty.
Besides the direct connection, it can also be seen that eWOM indirectly affects satisfaction variable and
loyalty. Similarly, the destination image indirectly affects loyalty. Thus the hypotheses can be proposed as
follows:
H6: The destination image mediates the effect of eWOM on satisfaction.
H7: The destination image mediates the effect of eWOM on loyalty.
H8: The satisfaction mediates the effect of eWOM on the loyalty.
H9: The satisfaction mediates the effect of the destination image on loyalty.

eWOM

Satisfaction Loyalty

Destination
image

Figure 1. Research Framework

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III. RESEARCH METHODS

3.1. Place and Time of Research
This research was conducted in the province of Bali, considering that Bali is a well- known tourist
destination both nationally and internationally. Bali, as a major tourist destination in Indonesia, was awarded
The Best Island of all over Asia-Pacific from DestinAsia, a travel magazine based in Hong Kong (ABI,
2009). The survey on the respondents was conducted over six months, ie from the beginning of July 2012
until the end of December 2012.
3.2. Population and Sample
The population in this study are all the local travelers who have been to Bali at least twice, are at
least 18 years old, and always write or communicate in a forum on the internet (ie facebook, twitter, blogs,
yahoo messenger, BBM = BlackBerry Messenger, and etc.) about the island of Bali as a tourist destination.
Because the population study is infinite, the sampling method used was non-probability sampling, by
applying the technique of judgment sampling. The sample size was determined based on rules of thumb, of
analysis tools, of Structural Equation Modeling (SEM), which is based on the complexity of the model and
the estimation technique chosen. For studies using SEM with maximum likelihood estimation technique and a
model consisting of five constructs or less, the recommended minimum sample size ranges from 100 to 150
(Hair et al., 2006). Referring to this, the number of samples in this study was determined by as many as 150
travelers.

3.3. Data collection and Measurement

The data used in this research is a primary data obtained by applying data collection instruments
such as questionnaires. Primary data collection is divided into two parts, the first part is the data on the
characteristics of the respondents such as gender, age, education, income, and so on, while the second part
contains statements of a questionnaire to determine the respondents' perception on the variables of research
that include eWOM, destination image, satisfaction, and loyalty.
1) eWOM
In this study, eWOM is defined as informal communication that flows through Internet media, both
between producers and consumers and among consumers themselves. The communication was in the form of
positive or negative statements with respect to a particular product, in this case is the tourist destination, the
Island of Bali. This definition is a summary of the views expressed by Hennig-Thurau et al. (2004) and Litvin
et al. (2008).

The instrument used to measure the variables of eWOM was developed, based on the measurements
of Gruen et al. (2006) and adapted to the study, in which four indicators, namely information, knowledge,
answers, and reliability, measure the variables. The four indicators used are highly relevant because they
represent eWOM as a communication forum that can provide valuable information for tourists. eWOM
variables are measured through four statements using a Likert scale with a score of 1-5 (1 = strongly disagree
to 5 = strongly agree).
2) Destination Image
Referring to the opinion of Seaton & Bennett (1996), (in this study,) the destination image is defined
as a set of knowledge and impressions held by local travelers of Bali, including information on geography,
population, infrastructure, climate, history and culture, as well as assessment of the attraction, security and so
forth. The instrument used to measure the destination image variables were developed based on the
measurement of Chi & Qu (2008) and adjusted for the study, in which the variable is measured by 9
indicators, namely travel environment, natural attraction, entertainment and events, historic attraction,
infrastructure, accessibility, relaxation, outdoor activities, as well as price and value. The destination image
variables were measured through 39 statements by using a Likert scale with a score of 1-5 (1 = strongly
disagree to 5 = strongly agree).
3) Satisfaction
Based on the opinion of Chi & Qu (2008), it can be stated that satisfaction with regard to the
experience of travelling is a function of satisfaction aboutthe elements of destinations in Bali made up of
experience, such as accommodation, weather, natural environment, social environment and others. The
instrument used to measure the satisfaction variables were also measured with the 7 indicators, based on the
research of Chi & Qu (2008) namely lodging, attractions, shopping, dining, activities and events,
accessibility, and environment. Satisfaction variables are measured through seven statements by using a
Likert scale with a score of 1-5 (1 = very dissatisfied to 5 = very satisfied).

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4) Loyalty
Referring to the opinion of Oliver in Kotler & Keller (2006), in this study, loyalty is defined as a
very deep commitment to make a return visit to the island of Bali in the future. The instrument used to
measure the satisfaction variables has been measured with three indicators, namely possitive things, revisit
intention, and recommend to friends (Zeithaml et. Al., 1996). Loyalty variable is measured by 3 statements,
using a Likert scale with a score of 1-5 (1 = strongly disagree to 5 = strongly agree).

IV. ANALYSIS AND RESULTS

4.1. Descriptive Analysis of the Characteristics of Respondents
Based on the data collected, it can be seen that the majority of respondents (80%) who were involved
in eWOM are derived from the young group aged under 40 years. The group of respondents over the age of
40 years have less involvement with eWOM. This can be understood considering the phenomena which
appear in general suggest that the younger group is more familiar with the use of Internet-based
telecommunication facilities as the ongoing media of eWOM activities. In addition, the younger groups also
generally have a higher tendency to socialize compared with the older groups. The data also showed that the
majority of respondents were actively involved in the conversation via eWOM, wheras the most widely used
communication media of eWOM are the social networking site of Facebook and the Blackberry Messenger.
All respondents in this study had the experience of visiting Bali at least twice, whereas the majority of
respondents (57%) have been to Bali as much as twice to three times. This means that the respondents already
have sufficient knowledge about various things related to tourist destinations of Bali, which are obtained from
their previous experiences. Most of the respondents who were engaged in conversation about Bali on internet-
based media (88%) stated to be actively involved. This means that they actively inform, leave a comment or
question in the discussion. Meanwhile, the most widely used Internet-based communication media in the
discussion is the social media of Facebook (45%), as well as the instant messaging facilities such as
Blackberry Messenger (41%) and Twitter (24%). This fact is in line with the information that has been
presented previously that the Indonesian people are the world's second largest Facebook users after the United
States, and the third largest Twitter users after Japan and India (Kompas, 2011).

4.2. Structral Equation Modeling Analysis

The analysis of the model measurement was carried out by using Confirmatory Factor Analysis.
Table 1. shows that all indicators have the loading factor value which is greater than 0.30, so the indicators
can be declared valid in forming the variables of eWOM, the destination image, the satisfaction and the
loyalty, so as to be used for further analysis.

Table 1. Results of the Confirmatory Factor Analysis

Variables Indicators Factor loading Comments
eWOM Information 0,740 Valid
Knowledge 0,806 Valid
Answers 0,724 Valid
Reliability 0,821 Valid
Destination Image Entertainment and event 0,590 Valid
Natural attraction 0,666 Valid
Travel environment 0,535 Valid
Historic attraction 0,575 Valid
Infrastructure 0,716 Valid
Accessibility 0,444 Valid
Relaxation 0,660 Valid
Outdoor activities 0,686 Valid
Price and value 0,590 Valid
Satisfaction Lodging 0,694 Valid
Attractions 0,773 Valid
Shopping 0,702 Valid
Dining 0,684 Valid
Activities and events 0,668 Valid
Accessibility 0,433 Valid
Environment 0,553 Valid
Loyalty Revisit intention 0,898 Valid
Recommend friends 0,877 Valid
Say positive things 0,695 Valid

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Tests on each propositions and hypotheses made by using the results of the structural analysis models as
shown in the following Table 2.:

Table 2. Causality Test of Regression Weight

Critical
Standardized P-value
No Path Ratio
Estimate (P)
(C.R.)
4,434 0,000
1 eWOM  DESTINATION IMAGE 0,552
0,739 0,460
2 eWOM  SATISFACTION 0,079
0,662 0,508
3 eWOM  LOYALTY 0,064
4,154 0,000
4 DESTINATION IMAGE  SATISFACTION 0,585
3,247 0,001
5 DESTINATION IMAGE  LOYALTY 0,467
2,396 0,017
6 SATISFACTION  LOYALTY 0,262

eWOM H2
H1 B = 0,064 ; p = 0,508
B = 0,079 ; p = 0,460 (not significant)
(not significant)

P1
B = 0,552 ; p = 0,000
(significant at α=5%)
Satisfaction Loyalty
H5
B= 0,262 ; p= 0,017
(significant at α=5%)
H3
B = 0,585 ; p = 0,000
(significant at α=5%)

Destination
image H4
B = 0,467 ; p = 0,001 / B = 0,624 ; p = 0,000
(significant at α=5%)

Figure 2. Path Diagram of Proposition and Hypothesis Testing

Based on Table 2. and Figure 2. it is shown that almost all existing direct effects proved significant
with CR> 1.96 and p ≤ 0.05, except for the direct influence of eWOM on satisfaction and loyalty which were
found to be not significant. Thus, in the absence of a significant direct influence of eWOM on satisfaction and
loyalty, it can be stated that the destination image fully mediates the influence of eWOM on satisfaction and
loyalty. Meanwhile, because eWOM does not have a significant direct effect on both satisfaction and loyalty,
it can be stated that satisfaction does not mediate the influence of eWOM on loyalty. It has been proven that
the destination image has a significant direct effect on satisfaction. In addition, satisfaction has a significant
direct effect on loyalty. Figure 2 also explains the existence of a significant direct effect of destination image
on loyalty. To determine the role of mediation played by the satisfaction in this context, a test was conducted
on the structural model without including the satisfaction variable. The goal was to determine the changes in
the value of the effect of the destination image on loyalty. In the structural model without the satisfaction
variable, the amount of the effect of destination image on loyalty is 0.624. This figure is greater than the
effect of destination image on loyalty to the structural model involving the satisfaction variables, namely
0,467. This means that some of the destination image influences on loyalty are absorbed by the satisfaction

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variables. It can be concluded that the satisfaction variables partially mediate the effect of destination image
on loyalty. Thus, it can be concluded that the P1, H3, H4, H5, H6, H7, H9 are acceptable, whereas H1, H2,
H8 are rejected.

V. DISCUSSION
The data obtained show that the majority of domestic tourists who obtain on-line information about
Bali, can be classified as younger age groups. Most of the domestic tourists stated that they are actively
involved in the discussions about Bali via the social media such as Facebook and Twitter, as well as
Blackberry Messenger networks. The younger groups generally have more free time to socialize with fellow
friends. They are also relatively more familiar with the use of internet technology communication devices
such as smartphones and tablet computers. With such characteristics, the young group, deriving from the
middle class on an average, can be considered as a potential market segment for marketing tourism products.
The tourism industry can take advantage of eWOM through popular social media as one means of promotion,
which is effective and efficient. It is assumed that the promotion through eWOM can quickly reach a large
tourist market in a very wide area. Besides, it is also more efficient because of the benefits gained by
promotion through eWOM do not require a vast amount of capital. With the rapid growth of the number of
social media users in Indonesia, the dissemination process of eWOM can certainly further accelerate and
expand tourism in Bali.

The analysis shows that eWOM proved to have a positive and significant influence on destination
image. The knowledge gained through the local tourist eWOM communication can affect their perceptions
and attitudes towards the image of a destination. This finding is in line with the results of the study of
Jalilvand & Samiei (2012), as well as strengthening the theory of Baloglu & McCleary (1999), supported by
Beerli & Martin (2004). In their research, Jalilvand & Samiei (2012) found that eWOM has an influence on
the brand image of a product. While Baloglu & McCleary (1999), state that the information resources play an
important role in the formation of a destination image. When viewed by using the dynamic theory of
knowledge creation of Nonaka et al. (2000), it can be explained that the interactions between the tourists
through conversation in on-line media has been generating knowledge for the tourists. In this case, the
knowledge in question is all the information related to various dimensions of a tourist destination. The
information is then internalized by tourists so that it ultimately shapes the perceptions and attitudes of the
tourists about the image of a tourist destination which is being discussed. The reliability of local tourist
information obtained through eWOM will increase knowledge about Bali. The better their knowledge about
Bali, the better their perceptions of the image of the tourist destinations of Bali.

In contrast to the results of the research of Castaneda et al. (2007), this study found no direct
significant influence of eWOM on satisfaction. Nevertheless, there is a difference between the models in the
research of Castaneda et al. (2007) and the model used in this study. In the research of Castaneda et al.
(2007), there is involvement of the destination variable experience, and Internet experience, which is
moderating the influence of eWOM on satisfaction. The results of these studies indicate that the the influence
of eWOM on satisfaction will be significant if the tourists have never visited the tourist destination, and if
they have extensive experience in the use of the internet. According to this study, tourists who were
respondents, generally have had considerable experience with the tourist destinations of Bali, because the
majority of respondents have visited Bali more than two times. Referring to the results of the research of
Castaneda et al., (2007), it can be understood that the knowledge gained from a visit to Bali in the past, has a
dominant influence on satisfaction; thus, the result from the influence of eWOM on satisfaction becomes
insignificant.

Just as the relationship between eWOM with satisfaction, this study also did not reveal any
significant direct influence of eWOM on loyalty. This fact is in contrast to the results of the research of Gruen
et al. (2005) who stated that there were direct influences of eWOM on loyalty. Because the eWOM does not
have a significant direct effect on the satisfaction and loyalty, it can be stated that satisfaction does not
mediate the influence of eWOM on loyalty.This study also proved that the destination image can provide a
significant and positive effect on satisfaction. This fact supports the findings of Chi and Qu (2007) and
Prayag (2009). This means that the better the perception of tourists of the image of the tourist destination of
Bali, the higher the level of satisfaction that will be felt. Not only the effect on satisfaction, but also the
destination image is relevant to provide a significant and positive effect on loyalty. This finding is in line
with the results of the research of Prayag and Ryan (2011). This means that the better the perception and
assessment of domestic tourists on Bali, the greater their intention to come back, and the greater their
intention to tell positive things about Bali and even recommend it to others.

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As previous studies conducted by Chi and Qu (2007), Prayag (2009), as well as Prayag and Ryan
(2011), have shown, this study can also re-confirm the presence of a significant and positive effect of
satisfaction on loyalty. Satisfaction perceived by domestic tourists when visiting Bali will directly increase
their loyalty to Bali.Although this study found that the direct influence of eWOM on the satisfaction was not
significant, it was revealed, however, that eWOM has indirect influence on the satisfaction with mediation of
a destination image. Besides that, it turns out that the destination image also mediates the effect of eWOM on
loyalty. Thus, eWOM will be able to increase the satisfaction and loyalty rating if eWOM is able to create a
positive image of Bali. The test results found that the destination image also has an influence on loyalty both
directly and indirectly through the mediation of satisfaction. Thus, it can be stated that the effect of a
destination image on loyalty is partially mediated by satisfaction. This means that a positive image of Bali
can directly increase tourist loyalty, as well as through increasing satisfaction during their tour in Bali.

VI. RESEARCH IMPLICATIONS

6.1. Theoretical implications
The results of empirical testing in this study were able to prove the existence of a significant
influence of eWOM on destination image. It is certainly could enrich knowledge especially with regard to the
role of eWOM, which is still rarely studied. This finding confirms the theory as well as destination image
formation of Baloglu & McCleary (1999), especially related to the stimulus factors that are antecedents of the
destination image. In this case, the variables of eWOM featured as one of the types of sources of information,
which is another form of traditional WOM. The presence of eWOM with its characteristics that differ from
traditional WOM has been given its distictive characteristics by the available studies in the field of tourism
marketing, especially with regard to the topic of tourist behavior.Empirical evidence, which has been
successfully demonstrated through this study, also further clarifies the role of destination image as a key
factor in creating satisfaction and loyalty among tourists. Destination image does not only provide a direct
positive effect on satisfaction and loyalty, but also acts as a key mediator that connects eWOM with
satisfaction and loyalty. Thus, the destination image will become more interesting to be studied and explored
in depth. In addition, the structural model shown in this study can be used as a reference concerning future
research. Thus, it can be said that the pattern of relationships between variables such as eWOM, image,
satisfaction and loyalty is a significant contribution to the development of marketing concepts and theories on
a wider scale.

6.2. Practical implications

With the findings of evidence that eWOM has a positive and significant impact on destination
image, it can be a valuable input for the stakeholders in tourism and the government, as the policy makers in a
tourist destination. These findings suggest that eWOM functions can be optimized as an effective tool in
order to form a positive image of a tourist destination.The government and the national tourism industry can
contribute actively to creating a forum on the internet as a means of communication with the tourists, as well
as a forum for ongoing interaction and information exchange between tourists themselves. All forms of
information conveyed by tourists, either positive or negative in nature, can be a valuable input for the
government and the tourism industry to make improvements related to tourist destinations that are within
their operational area.The structural models generated in this study may provide an overview of the process of
systematically creating loyalty. With reference to the model, it will become easier for the government and the
tourism industry to determine priorities in order to create loyalty among tourists.

VII. CONCLUSION, LIMITATION AND FUTURE RESEARCH

eWOM has a direct positive and significant impact on destination image. A variety of information
about Bali that the domestic tourists obtain through forums on the internet, directly influence their image of
the island of Bali. If tourists have made previous experiences, eWOM does not provide a significant direct
effect on satisfaction and loyalty. Nevertheless, eWOM can still provide indirect influence on satisfaction and
loyalty that is fully mediated by the destination image. Similarly, the destination image is stated to have an
indirect effect on loyalty which is partially mediated by satisfaction.This study has a limitation because the
respondents surveyed were restricted to the domestic tourists only.

Thus, the results of the study cannot be generalized for the overall tourists, especially for those
foreign tourists who come from the developed countries that are advanced in the use of Internet-based
communication technologies. Therefore, future research should be carried out by focusing on another object
or different respondents such as tourists from USA, Japan, Australia, Europe and others to obtain a better
level of generalization of research results.

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