Does Place Matter When Shopping Online? Perceptions of Similarity and Familiarity as Indicators of Psychological Distance
Steven M. Edwards
Southern Methodist University
Jin Kyun Lee
University of Texas at Austin
Carrie La Ferle
Southern Methodist University
Abstract
This research investigates the role of physical location in online consumer purchases, as demonstrated through the concept of distance. Distance conveys a sense of not only space between objects in the physical world but also psychological distance between people and others. This study tests various combinations of both physical and psychological distance between subjects and companies, brands, and cities in which the companies are located. The findings affirm the power of relationships to reduce feelings of mistrust and suggests a new avenue for research into the role of similarity and familiarity as important variables in purchase decisions online.
Keywords: Distance, Psychological Distance, Trust, Store Location
Introduction
In the past few decades, many observers have argued that technology and globalization make geography less relevant in consumption activities (Joyce 2002; Levitt 1983). The frequently cited benefits of lower search costs, convenience, and increased competition have, at their core, the idea that space and time become inconsequential online. However, research on cultural identity, social and economic change, and cultural changes brought about by electronic media and globalization reveals that both space and place matter (Griswold and Wright 2004). In addition, sociologists and anthropologists show that the culture of place, the influence of local social patterns, and interpretation of what places mean are more robust than ever before (Anholt 2007; Griswold and Wright 2004; Papadopoulos 2004). Furthermore, burgeoning literature on psychological distance is defining the impact of a lack of connection and a lack of shared values on consumer information processing and decision making (Chapin 2001; Kim, Zhang, and Li 2008; Trope, Liberman, and Wakslak 2007).
This study extends existing literature by examining the concept of distance in an online retailing environment. We argue that retailers need to manage psychological distance to enhance connections with consumers and facilitate the trust required for successful transactions. This research therefore tests elements of the online environment that might signal "connections" between online retailers and consumers and reduce feelings of distance. Specifically, store and brand familiarity, geographical proximity, and the psychological meaning of location, as each pertains to trust during online purchase decisions, provide the roots of this investigation.
Psychological Distance
Distance is a multidimensional concept that can convey a sense of space between objects in a three-dimensional physical world, a psychological distance between people, or even the time between events. Most related to the interaction of consumers and businesses is the idea of a social interaction or interpersonal distance. In this context, distance refers to a lack of connection between two people (Kreilkamp 1984) or a cognitive state of weaker psychological bonds (Hess 2002). The concept summarizes an important dynamic in human relationships in many areas, including human communication, psychology, sociology, counseling and therapy, and family studies (Hess 2002, 2003).
Although all relationships between people or organizations have some level of psychological distance, extreme psychological distance prevents people from achieving or approaching what matters to them (Kreilkamp 1984). Reducing psychological distance decreases the sense of danger, lowers barriers and self-defense mechanisms, and provides feelings that are real, genuine, more open, and trusting. Thus, from the viewpoint of interpersonal psychology, psychological distance describes how people create and regulate behaviors to maintain relationships with liked or disliked, and/or familiar or unfamiliar, people.
Many studies explore various aspects of social intimacy, with their basis in perceptions of familiarity and similarity among persons (Goffman 1967; Hess 2002; Morimoto and La Ferle 2008; Weinfurt and Moghaddam 2001). However, most germane to the current research are studies on psychological distance in a consumer context (Chapin 2001; Kim, Zhang, and Li 2008; Trope, Liberman, and Wakslak 2007). For example, Trope, Liberman, and Wakslak (2007) conceptualize psychological distance as the degree to which an event is removed from a person's direct experience, whether temporally, physically, or socially. They explore how psychological distance affects people's thoughts during decision-making processes. Specifically, their study examines the types of features that consumers evaluate when they encounter different types and levels of psychological distance. Events occurring farther in the future, farther away geographically, and with people less like oneself should increase psychological distance. Because consumers have less knowledge of such distant events, they construe them more abstractly than those that occur with less psychological distance. Such abstract levels of thought introduce more ambiguity and more risk and therefore may induce lower levels of trust in comparison with situations marked by less psychological distance.
Kim, Zhang, and Li (2008) examine the concurrent effects of two dimensions of psychological distance identified by Trope, Liberman, and Wakslak (2007), namely, temporal distance and social distance. Temporal distance relates to decision making about the near-future versus the distant future, whereas social distance refers to recommendations from in-group versus out-group members. They define psychological distance as "the subjective distance between an actor and an event in the actor's psychological space" (Kim, Zhang, and Li 2008, p. 707) and test the degree to which the different dimensions may influence feelings of distance independently or interactively. In two different studies, these authors find that greater distance results in more abstract consumer processing. When faced with recommendations from in-group members about an event to occur in the near future, subjects focus on concrete details; when they receive information from out-group members about distant future events, they focus on more global and abstract information. Therefore, psychological distance appears to have an important effect on the manner in which consumers process information, which creates opportunities for marketers to influence the attributes considered in decision making, along with the types of connections experienced by consumers.
Chapin (2001) instead examines psychological distance as it relates to first- versus third-person perceptions of public service announcements. Specifically, he explores the role of psychological distance in identifying relevant evaluation groups when consumers must make comparative risk assessments of their own behaviors. Psychological distance in this study includes perceived similarity, familiarity, and identification with another person or group. When this psychological distance with an other increases (i.e., spouse versus coworkers versus other residents of the same town), perceptual bias also increases. Therefore, consumers are likely to face greater uncertainty and must project their own expectations onto more psychologically distant others when their level of knowledge decreases. Familiarity should be critical in explaining feelings of psychological distance.
For the current study, we enhance knowledge about psychological distance in a consumer context by examining the impact of the geographical and social dimensions of psychological distance on trust and applying psychological distance to an online purchase situation. Using the definition of psychological distance provided by Trope, Liberman, and Wakslak (2007), we define the feeling of distance as the degree to which a consumer lacks connection with a retailer. In line with Chapin (2001), we also believe that psychological distance is elicited or attenuated relative to judgments about the familiarity or similarity of consumers with others. As previous studies show, greater psychological distance suggests greater risk and forces consumers to make more abstract judgments. Familiarity instead suggests some level of knowledge about a retailer, which may reduce uncertainty. Perceived similarity offers an additional attribute on which to judge a retailer according to the employees of the company or its stated corporate values. In contrast with Trope, Liberman, and Wakslak (2007), we do not require direct experience, because even mediated or second-hand experience may shape perceptions of distance toward online retailers. Similar to Kim, Zhang, and Li (2008), we also expand the notion of psychological distance to an attitude object (the retailer) and a secondary attribute of the object (location of the retailer), which both may influence feelings of distance. Depending on the attribute activated in the decision-making process, both familiarity and similarity may serve as relevant cues that consumers use to reduce uncertainty and evaluate the trustworthiness of an online retailer. We review literature pertaining to both constructs to develop support for our hypotheses.
Antecedents of Psychological Distance
Familiarity
Familiarity may provide an important antecedent of psychological distance and benefit for online retailers, because consumers who are more familiar with retailers and brands exhibit many beneficial characteristics. In particular, Grush (1976) finds that unfamiliar stimuli elicit few associations, whereas repeated exposures generate further elaboration. Alba and Hutchinson (1987) describe how familiarity leads to better developed cognitive structures through increased knowledge and can be defined by the number of product-related experiences accumulated by consumers. If consumers gain multiple exposures to the same attitude object, mere exposure to a stimulus should enhance their attitudes toward the object, as long as their previous exposures generated positive attitudes (Zajonc 1968). However, if previous encounters were negative, further exposure seems to produce increasingly negative evaluations (Burgess and Sales 1971; Suedfeld et al. 1971; Tesser 1978). To the extent that a final evaluation of a stimulus is a function of the accumulated evaluations of its associations, summed evaluations of positive stimuli become more positive, whereas summed evaluations of negative stimuli become more negative (Söderlund 2002). However, consumers tend to avoid risks and exhibit preferences for the familiar rather than the unknown (Bornstein 1989), so those with positive impressions of retailers and brands should seek out these familiar entities online.
In the case of psychological distance, Goffman (1967) shows that people maintain face and use social conventions to distance themselves psychologically from one another and minimize conflicts with others (Hess 2003). A similar argument applies with regard to psychological distance in an online consumer context: Prior experience with online retailers and the brands they sell should result in efforts to manage approach and avoidance behavior. Positive experiences induce repeated behaviors and decreasing psychological distance, whereas negative experiences should result in avoidance behaviors and greater feelings of psychological distance. Because positive experiences lead to repeated interactions, consumers develop familiarity, and people like the familiar, whether it be other people, advertising, brands, or retailers. Familiarity therefore should encourage greater connections, as evidenced by lower levels of psychological distance, reduced uncertainty, and thus higher levels of trust. In the absence of familiarity or in encounters with an unknown retailer online, we instead argue:
H1: An unknown online retailer elicits more psychological distance than does a known online retailer.
When retailer familiarity remains constant, consumers may look for additional cues to reduce their uncertainty, such as the brand offered for sale by the online retailer. If the brand is familiar, this information may help the consumer reduce the psychological distance between him- or herself and the online retailer. However, an unfamiliar brand is likely to increase the psychological distance between the consumer and the retailer. All other things being equal, we expect:
H2: An unknown brand elicits more psychological distance than does a known brand.
When retailer familiarity is high and reflects positive past experiences, brand familiarity as a distance cue may become secondary to retailer familiarity in perceptions of psychological distance. In this situation, consumers may experience retailer-related approach behavior but not focus on brand information as an indicator of retailer familiarity. However, in the absence of retailer familiarity information, brand familiarity should become more important in perceptions of familiarity with that retailer. In this second situation, consumers should experience greater psychological distance, because they can only base their judgments of retailer familiarity on the brand offered. Following this logic, we expect:
H3a: When the retailer is known, there is no difference in psychological distance reported for an unknown versus a known brand.
H3b: When the retailer is unknown, an unknown brand elicits more psychological distance than does a known brand.
Similarity and Geographic Proximity
Similarity is another method that parties may use to evaluate psychological distance. According to various empirical studies in sales, marketing, and social psychology, similarity reflects judgments about sameness or, in a commercial context, whether consumers and companies are alike. When consumers perceive that companies hold similar corporate values, those firms can build rapport, persuade buyers, and close sales (Lichtenthal and Tellesfsen 2001). For example, in an advertising context, Whittler and DiMeo (1991) evaluate similarity by examining the reaction of white and black consumers to the race of ad models. Black consumers prefer black models, which demonstrates the importance of similarity in eliciting positive attitudes. Morimoto and La Ferle (2008) instead examine credibility issues but find that Asian American consumers prefer racially congruent models, though more important than race alone, perceived similarity between the parties drives relationship outcomes. Therefore, perceptions of similarity with another seem to reduce feelings of separateness, which represent psychological distance (Chapin 2001). Facilitating a connection through similarity could result in reduced psychological distance.
Psychological distance also appears in international business studies as the lack of similarity across language, education, business practices, culture, religion, and political systems (Carlson 1974; Dow 2000; Johanson and Vahlne 1977; Johanson and Widersheim-Paul 1975). Distance in any of these areas can inhibit the flow of information between a firm and foreign markets and decrease feelings of trust.
Similar to interpersonal distance, geographical distance may provide a surrogate indicator of psychological distance in international trade (Carlson 1974; Dow 2000). Dow (2000) determines that geographical distance can predict export market selection, such that as distance increases, export markets become less likely to be selected. Geographical distance also affects the costs of collecting and transmitting important management information, which may affect the success of firms in foreign markets. Nordstrom and Vahlne (1994) report that companies perform best in foreign markets nearest their domestic market, because nearer countries are easier to learn about and more familiar. Similarly, Leonidou, Barnes, and Talias (2006) show that relationships become stronger through familiarity with others' social and cultural norms. When trading partners appear to have shared values, trust is likely to flourish (Roberts 2000). In an online environment, similar principles may apply but could become even more critical, because judgments about trading partners rely on fewer tangible cues (De Laat 2005). This state may leave consumers looking for alternative ways to assess shared social and cultural values to determine whether to exhibit trust in the relationship.
We examine similarity according to the physical location of an online retailer in relation to the physical location of the consumer. The proximity of a store and perceptions of similarity in geographical locations should influence online purchase decisions by altering feelings of psychological distance. First, consumers may associate less risk with purchases from local companies than from distant companies due to their proximity. If a problem occurs, they can easily return items to a store that is close to the consumer's location. Benedicktus and colleagues (2007) also indicate that a local retail outlet conveys a sense of trustworthiness online. Second, local companies may benefit from judgments of greater similarity to local consumers, because they may appear to embrace shared community values and norms.
Geographical proximity also may indicate homogeneous communities, which often form collective identities distinct from those of different communities, which then results in intergroup attitudes (Sharlin and Moin 2001). In turn, geographical proximity may increase the sense of similarity between consumers and local companies and reduce feelings of psychological distance. Similar feelings may extend to the online environment as well, depending on the locations where the companies are physically located, when consumers look for trust cues about online retailers to reduce the ambiguity associated with shopping online. A study by the Internet Crime Complaint Center (IC3 2003) reveals that 71% of online shoppers look at the physical address of the seller before making a purchase from an unknown retailer online. Consumers' concerns about shopping online and their search for cues that may reduce the risk associated with such action prompts us to propose:
H4: Online stores located closer to consumers elicit less psychological distance than do online stores located father away.
Related to the effects of geographical proximity, we posit that a retailer located physically far away but in a location that provides a similar image to that of the consumer's own town may reduce feelings of psychological distance. For example, people may develop conceptions about themselves and others on the basis of where they live. Individual geographic locations elicit both positive and negative images and can be internalized to form individual identities (O'Cass and Frost 2002). Such images also may transfer to people and companies (Gregan-Paxton and John 1997) and thereby influence the perceptions of people and companies from a specific geographical location.
To the extent that a geographical location appears similar to a consumer's current location, feelings of similarity might be projected onto physically distant locations, and the attributes or values embraced by the consumer's current location could be projected onto people in distant locations. To the extent that congruent location images exist, consumers should feel less psychological distance. Therefore, we expect:
H5: Online retailers in locations with an image congruent to that of the location in which the consumer resides elicit lower psychological distance perceptions than do online retailers in locations with incongruent location images.
However, if retailers are located near the consumer, location image may become secondary to retailer proximity in perceptions of psychological distance. That is, proximity becomes a more important attribute on which to judge psychological distance, because consumers may perceive less uncertainty associated with handling a purchase problem. In addition, the consumer may consider the nearby retailer more similar. However, for a distant retailer, consumers may overlook its proximity as a means to reduce their uncertainty and instead focus on an alternative attribute, such a location image. Therefore, these consumers have less information on which to base their similarity judgment and should experience greater psychological distance. Following this logic, we expect:
H6a: When online stores are located near consumers' locations, perceived location similarity between the online store and the consumers' location does not influence their feelings of psychological distance.
H6b: When online stores are located far from consumers' locations, perceived location similarity between an online store location and the consumers' location reduces feelings of psychological distance.
Trust as a Consequence of Psychological Distance
A logical outcome of social or geographic distance is reduced trust. Trust represents an inherent characteristic of social interactions, in which people demonstrate the ability to accept or approve of something without further investigation or evidence (Yoon 2002). Trust also has been conceptualized as a guiding mechanism in exchange relationships characterized by uncertainty, vulnerability, and dependence. Koehn (2003) suggests that at its core, trust contains an expectation of goodwill by the trusted party. When trust does not exist, perhaps due to a lack of connection, as exemplified by psychological distance, consumers should experience greater uncertainty, be more skeptical of the interaction, and engage less with a trading partner. Such disengagement damages feelings of familiarity and opportunities to find similarities between consumers and retailers.
However, Stafford, Merolla, and Castle (2006) suggest that psychological closeness can develop through quality communication and reduce uncertainty in relationship development. Therefore, reducing uncertainty becomes a key goal in efforts to develop trust (Moorman, Deshpandé, and Zaltman 1993). Schlosser, Shavitt, and Kanfer (1999) also argue that trust becomes even more critical online, where evaluations of trustworthiness depend largely on mediated communication. Similarly, McCole and Palmer (2002) emphasize the importance of trust online, because the absence of face-to-face contact and other tangible cues make consumers hesitant to participate in e-commerce activity.
Although relationships between consumers and online retailers may emerge and grow stronger through good experiences (Jarvenpaa, Tractinsky, and Vitale 2000), the sheer number of online businesses implies that consumers must engage in some e-commerce activities with unfamiliar companies. When faced with consumer uncertainty, online retailers need alternative ways to help reduce their feelings of distance.
For example, in a business environment, consumers often give more weight to knowledge about a company than to price, product, and delivery information (Wilson and Lichtenthal 1985). Therefore, familiarity is critical for building connections with consumers. However, similarity also relates to higher degrees of trust and purchase intentions (Busch and Wilson 1976; Capon 1975), better evaluations of companies, and more productive sales interactions (Brock 1965; Busch and Wilson 1976; Capon 1975; Mathews, Wilson, and Monoky 1972). In line with extensive literature indicating the benefits of enhanced perceptions of familiarity and similarity for trust, we explore the relative power of each for capturing feelings of psychological distance.
Competing arguments exist regarding the role of familiarity and similarity in enhancing trust in online retailers. When consumers know the retailer, they likely use their past experience as the dominant attribute on which to form their perceptions of distance and trust. Granted some exceptions and additional variables to consider, an aggregation of past behavior offers a reliable indicator of future behavior in various situations (Fishbein and Ajzen 1974; Morwitz 1997). In contrast, when consumers are not familiar with the retailer, they may consider other factors relevant in their assessments of trustworthiness. We examine the role of perceived brand familiarity, perceived geographic distance, and perceived congruency of the retailer's location with the consumer's location to determine which element contributes most to the reduction of feelings of psychological distance and, ultimately, retailer trust. Retailer familiarity seems likely to emerge as the dominant predictor of psychological distance, but the lack of research on this topic prompts us to pose a research question, rather than a hypothesis, to evaluate the relative contribution of these variables to psychological distance perceptions. That is,
RQ1: What factors contribute most to reducing psychological distance in response to an offer from an online retailer?
In addition, because we seek to demonstrate the independence of psychological distance from the other variables in predicting trust, we ask:
RQ2: Will psychological distance contribute variance, in addition to that explained by perceived familiarity with the retailer, perceived familiarity of the brand, perceived geographic distance of the retailer, and perceived geographic similarity of the retailer's location to the consumer's location?
Methodology
To test the hypotheses pertaining to retailer familiarity, brand familiarity, geographical proximity, and location congruency, we undertook an online experiment. Subjects (n = 412) were randomly assigned to view one of 16 different online purchase opportunities. The study used a 2 (low retailer familiarity versus high retailer familiarity) × 2 (low brand familiarity versus high brand familiarity) × 2 (near location versus far location) × 2 (incongruent location image versus congruent location image) full-factorial, between subjects design. We measured perceptions of both psychological distance and trust.
Subjects were solicited from a Midwestern U.S. university via e-mail and asked to evaluate a new Web site selling digital cameras. Digital cameras are a common purchase among university students and tend to induce high levels of interest and involvement. Cameras also provide a relatively gender-neutral product, which allows us to draw a mixed sample. The student participants received extra course credit for their participation and knew they would need to answer questions about their experience. We randomly assigned these subjects to view one of the mock Web pages and then asked them to complete the online survey.
Independent Variables
We standardized the online stimuli except for the manipulated variables of interest (i.e., retailer familiarity, brand familiarity, geographical proximity, and location congruency). Each Web site showed a retailer name at the top of the page, with a large picture of a digital camera. The sites also contained the brand name of the camera and the location from which the product would be shipped. We provide a sample screen shot of the Web page in Figure 1.
Figure 1. Sample Stimulus
To manipulate retailer familiarity, we used an existing online retailer (Amazon.com) versus a fictitious retailer (CanogaCamera.com). The brand familiarity manipulation similarly relies on an existing brand (SONY) versus a fictitious brand (PASOCON). The shipping location appeared in bold type in two places on the Web site; we used this information to manipulate both the geographical proximity of the online retailer to the subjects and the perceived image similarity of the retailer's location to the subjects' location. The proximity manipulation employed a city closer or farther away from where the subjects lived. Finally, we manipulated location image by selecting cities with congruent or incongruent images to the location where the subjects lived.
To select representative locations, we conducted a pretest of 15 locations other than the subjects' residence. These locations should maximize variability in the variables of interest (geographical distance and image congruency), so we chose both large cities and small college towns across the country to highlight readily apparent attributes, such as approximate population size. The pretest subjects (n = 30) rated the perceived similarity of each location in comparison with their location (i.e., East Lansing, Michigan) on a seven-point Likert scale (1 = very dissimilar; 7 = very similar).
The most similar and dissimilar locations selected are both physically near and far from the subject's location of East Lansing. For example, the subjects perceived Stamford, Connecticut, as having a similar image but physically distant from their location. New York City had a dissimilar image and also was physically distant from the subjects. Detroit, Michigan, also had a dissimilar image compared with East Lansing, but it was located relatively close to the subjects' location.
Dependent Variables
Dependent variables included feelings of psychological distance toward and perceptions of the trustworthiness of the online retailer. Psychological distance refers to the degree to which a consumer feels a connection with a retailer. In this study, we operationalize this construct as a lack of closeness with a retailer, as evidenced by measures of familiarity and similarity with a retailer. The scale consists of eight items measured on a seven-point Likert-type scale with items that address both psychological familiarity and similarity with the retailer. For the familiarity items, subjects agree or disagree with statements such as, "I have heard of this company [store]," "I have previously purchased from this company [store]," "I don't know this company well," and "I am familiar with this company." The similarity assessment uses items including "People in the company hold the same world view as me," "I am similar to the people who work at the company [store]," "The company and I share similar values," and "I am similar to the people who work for the company." As necessary, items were reversed coded, such that higher scores indicate greater psychological distance. The items were internally consistent (α = .81).
We conceptualize trustworthiness as the ability to rely on or develop a conviction about the quality or attributes of a company (Bearden and Netemeyer 1999). The company trustworthiness measure uses five items: "I feel confident in purchasing a product from this company," "I would be comfortable buying products from this company," "This company seems trustworthy," "Compared with other companies, I trust this company more," and "This company has reliable service." All items emerged as reliable (α = .91).
Manipulation Checks
The manipulation checks use a single item for each of the following variables: retailer familiarity, brand familiarity, geographical distance, and image of the shipping location. We define retailer familiarity and brand familiarity conceptually as how well a person knows a company or brand (Strauss, Barrick, and Connerley 2001). Therefore, we measure this variable with the following statement: "I am familiar with this store." Respondents report greater familiarity with Amazon (
= 4.6) than Canoga Camera ( = 2.6; t(407) = 9.1, p < .001). The single item to measure brand familiarity states, "I know this brand of camera very well." Respondents report greater familiarity with Sony ( = 4.2) than Pasocon ( = 1.9; t(410) = 13.2, p < .001). For geographical proximity, we use the statement, "If I order the camera, it will come from far away," for which respondents report greater agreement when the camera ships from New York or Stamford ( = 5.1) compared with Detroit or East Lansing ( = 3.4; t(408) = 10.1, p < .001). Finally, the congruency between the retailer's location and the subject's location relies on the statement, "The location where the product will be shipped from is similar to my town." Respondents again report greater perceived location congruency when the location is East Lansing or Stamford ( = 3.8) rather than Detroit or New York ( = 3.2; t(407) = 3.6, p < .001).
Results
We use an ANOVA to test the proposed hypotheses regarding the effects of retailer familiarity, brand familiarity, geographical distance, and location congruency on psychological distance. As we show in Table 1, we uncover support for two of our six hypotheses and a single interaction.
Table 1. ANOVA Summary of the Effects of Independent Variables on Psychological Distance
Our first hypothesis predicts that an unknown company should elicit more psychological distance than a known company. As expected, we find a significant main effect of retailer familiarity, such that subjects feel greater psychological distance when viewing CanogaCamera.com ( = 4.7) than Amazon.com ( = 4.0; F (1, 394) = 48.8, p < .001), in support of hypothesis 1. That is, familiarity with an online retailer reduces feelings of psychological distance.
We also predict that an unfamiliar brand elicits more psychological distance than a known brand. Again, familiarity has a significant influence on feelings of psychological distance, such that subjects feel greater psychological distance when viewing PASOCON ( = 4.8) rather than Sony ( = 3.9; F (1, 394) = 62.46, p < .001), in support of hypothesis 2.
In hypotheses 3a and 3b, we propose an interaction between retailer and brand familiarity, arguing that a known retailer cancels out the effects of both familiar and unfamiliar brands, whereas an unknown retailer allows familiar brands to reduce psychological distance. However, we find no significant interaction between the types of familiarity (p > .05) and can offer support only for the null version of hypothesis 3a. Retailer familiarity operates independently from brand familiarity in perceptions of psychological distance.
We also propose that online stores located nearer subjects should elicit less psychological distance than those located in physically farther away, but again, we find no significant differences (p > .05). We therefore cannot support hypothesis 4, and geographic proximity does not appear to affect ratings of psychological distance.
Nor can we confirm hypothesis 5, in which we propose online stores located in a city with a congruent image to the location of the consumers' residence elicit less psychological distance than online stores with a discrepant location image. The lack of significant differences between conditions (p > .05) indicates location image is not a relevant attribute for ratings of psychological distance.
Finally, though we propose an interaction between geographic proximity and perceived location congruency on feelings of psychological distance, we find no significant interaction (p > .05), so we must reject both hypotheses 6a and 6b.
However, an interaction emerges between familiarity with the retailer and the perceived congruency of the retailer's location. When respondents are familiar with the retailer and perceive the company's location image as different from that of their own town, they perceive greater psychological distance than when they are less familiar with the retailer (F (1, 394) = 4.15, p < .05). The means for each condition (as we present in Figure 2) differ significantly (p < .05).
Figure 2. Perceived Similarity of Shipping Location for Familiar and Unfamiliar Companies
Notes: All means are significantly different at p < .05.
This finding highlights the importance of consumers' expectations related to online companies. When consumers are familiar with a store, they develop expectations about the retailer. If the reality diverges from their expectations, the consumers experience greater psychological distance. However, for unknown stores, the differences between locations actually reduce feelings of psychological distance. This finding seems somewhat counterintuitive, but it may indicate that respondents expect stores with which they are not familiar to be located in cities that they judge as different from their own, whereas they believe familiar stores should be located in similar locations. When these expectations are not met, their perception of psychological distance increases.
To examine our research questions, we next conduct two multiple regressions, using the measures of the independent variables captured by the manipulation checks, and regressed them on psychological distance and retailer trustworthiness. First, we regress the global measures of the independent variables on psychological distance using a stepwise regression. As we show in Table 2, all items provide significant predictors of psychological distance. The item "I am familiar with the company" loads first, followed by "The product will ship from a location similar to East Lansing," "I know this brand of camera very well," and finally, "The camera will be shipped from far away." The adjusted R2accounts for 63.4% of the variance in the psychological distance measure. Although all four variables load in the final equation, we can explain 61.1% of the variance with retailer familiarity alone, attesting to its relative importance compared with the other variables.
Table 2. Multiple Regression of Independent Variables on Psychological Distance (Stepwise)
| Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | |||
| B | Std. Error | Beta | |||||
| 1 | Retailer familiarity | -.399 | .016 | -.782 | 25.31 | .000 | |
| 2 | Retailer familiarity | -.398 | .015 | -.781 | 25.70 | .000 | |
| Location image congruency | -.086 | .022 | -.120 | 3.95 | .000 | ||
| 3 | Retailer familiarity | -.381 | .017 | -.748 | 22.97 | .000 | |
| Location image congruency | -.078 | .022 | -.110 | 3.62 | .000 | ||
| Brand familiarity | -.051 | .019 | -.088 | 2.67 | .008 | ||
| 4 | Retailer familiarity | -.377 | .017 | -.741 | 22.79 | .000 | |
| Location image congruency | -.087 | .022 | -.122 | 3.98 | .000 | ||
| Brand familiarity | -.047 | .019 | -.082 | -2.50 | .013 | ||
| Geographical distance | .045 | .020 | .070 | 2.29 | .022 | ||
| Notes: Model 4 R2 = .638, adjusted R2 = .634. |
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We also perform an analysis to assess if the measure of psychological distance accounts for unique variance, over and above that accounted for by the variables in the perceived retailer trustworthiness explanation. To determine the unique contribution of psychological distance, we conduct a two-stage multiple regression. First, we submit the continuous measures of the independent variables to a stepwise regression on retailer trustworthiness. As we show in Table 3, only two items load into the equation: "I am familiar with the company," followed by "I know this brand of camera very well." Together these two items explain 41.3% of the variance in retailer trustworthiness. Second, we enter psychological distance into the equation, which adds significantly to the adjusted R2 (R2 = .53).
Table 3. Multiple Regression of Independent Variables and Psychological Distance on Retailer Trustworthiness
| Model
|
Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
| B | Std. Error | Beta | ||||
| Entered Stepwise | ||||||
| 1 | Retailer familiarity | .368 | .022 | .639 | 16.724 | .000 |
| 2 | Retailer familiarity | .348 | .024 | .603 | 14.713 | .000 |
| Brand familiarity | .061 | .027 | .094 | 2.281 | .023 | |
| Location image congruency and geographical distance not significant. | ||||||
| 3 Final model | ||||||
| Step 1 | ||||||
| Retailer familiarity | .108 | .032 | .188 | 3.409 | .001 | |
| Brand familiarity | .024 | .024 | .036 | .979 | .328 | |
| Step 2 | ||||||
| Psychologicaldistance | -.051 | .019 | -.088 | -2.672 | .008 | |
| Notes: Model 2 R2 = .415, adjusted R2 = .413. Model 3 R2 = .534, adjusted R2 = .530. |
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Taken together, these analyses suggest the importance of retailer familiarity in reducing feelings of psychological distance and ratings of retailer trustworthiness. Our second analysis also demonstrates that psychological distance (as conceptualized herein) relates negatively to ratings of retailer trustworthiness and adds, as a unique construct, information beyond simple familiarity with the retailer or brand.
Discussion
Many online companies currently engage in relationship building tactics to facilitate trust, such as using satisfaction guarantees, customer ratings, the latest encryption technology for credit card information, and indicators of high-quality business (e.g., Better Business Bureau, Verisign, privacy policies). Our findings also suggest that online retailers could enhance their performance by creating an illusion of closeness that encourages feelings of familiarity and similarity among consumers. Both familiarity and similarity contribute significantly to the reduction of feelings of psychological distance.
Image similarity and geographical proximity might be implied with models in advertisements, regardless of how customer service employees actually appear or where they are physically located. A picture of a "friendly and familiar/similar operator standing by" could go a long way in reducing feelings of psychological distance between the consumer and the company.
Companies also might post actual customer comments on their Web sites to assure potential customers that others like them have been happy with their purchase decisions, which would help reinforce the perception of similarity. Amazon.com takes this recommendation a step further and suggests additional items (e.g., "people who searched for X also were interested in Y and Z"), because this savvy online retailer understands the benefit of similarity and emphasizes it whenever possible.
Other simple methods can help companies induce feelings of familiarity, including company names that seem familiar, slogans that highlight the importance of buying from a "name you know," or claims that they treat people like family or have served generations of consumers. Furthermore, Web sites should use page layouts, fonts, colors, symbols, and purchase procedures that seem familiar to instill comfort or sense the consumer has been there before. As the mere exposure effect demonstrates, consumers prefer the familiar, and emphasizing familiarity increases their comfort, liking, and trust (Zajonc 1968).
This study offers several new findings. First, we introduce the concept of psychological distance as a means to explore consumers' reactions online. This concept appears in prior interpersonal psychology, marketing, international trade, and even advertising appeal investigations but has not previously been transferred to an online consumption environment. Second, our findings illustrate the importance of familiarity and similarity in reducing psychological distance, as well as the role of psychological distance in limiting trust in an online retailer. In fact, psychological distance adds significantly to the ability of both retailer and brand familiarity to explain ratings of retailer trustworthiness.
We do not find support for our hypothesized interactions among the manipulated variables, but we confirm the importance of familiarity for both the retailer and brand. Both familiarity and similarity also enhance predictions of psychological distance. Our stepwise regression indicates the relative weighting of the four variables and highlights the importance of retailer familiarity for reducing feelings of psychological distance. Psychological distance also explains additional variance in ratings of retailer trustworthiness, even after we consider retailer and brand familiarity. Therefore, unfamiliar companies and/or brands should seek to reduce consumers' feelings of psychological distance to enhance perceived trustworthiness.
Our manipulations of geographical distance and location image congruency demonstrate no main effects for psychological distance online. Respondents do not differentiate these factors when considering a Web site and their psychological distance from it. Either the external validity of the experimental session is weak or these issues are not relevant to consumers. Both these possibilities are plausible.
There is no real risk in our study, because the respondents' decisions do not lead to their actual purchase of a digital camera. Therefore, issues of proximity and location image congruency might not have influenced respondents to the degree that they would in a real purchase situation. Further research should capture more ecologically valid purchase decisions to better activate variables associated with geographical location and heighten feelings of distance.
More research also should clarify the interaction between physical distance and perceived location image congruency. The one significant interaction we find suggests that consumers' expectations about the location congruency and retailer familiarity are relevant in a mismatch condition. Therefore, consumers appear to allow for an unknown online retailer in a different type of location, but they feel more distant from an unknown retailer located in a location similar to their own. Additional examination of this finding should investigate why this result occurs; preliminarily, we suggest that retailers promote familiarity over similarity of place as a cue to reduce psychological distance.
Other extensions to this research might modify our experimental design to include a condition with no place information as a control. The lack of location information, which is more realistic in online purchase experiences, may create greater feelings of psychological distance (if noticed) or reduce such feelings by eliminating the signals that suggest place is a relevant purchase criteria. Each alternative would be interesting to test.
Finally, our research suffers from several methodological shortcomings. Mentioning these issues is not meant to dismiss their importance but rather to help readers understand the limitations of the current study and suggest better means of furthering research in the area. First, we operationalize psychological distance according to perceived familiarity and similarity of subjects with the retailer. This measure approximates connection but does not directly measure psychological distance, as conceptualized in several recently published studies. Our independent variables relate to familiarity and similarity, as does the measure of psychological distance; therefore, our findings may overstate the true relationship among familiarity, similarity and psychological distance. Recent research provides suggestions for some alternative measures of psychological distance, and research should examine these different measures to assess the validity of our findings.
Second, our study suffers from issues of generalizability, because we use a college student sample, employ an experimental treatment that lacks any of the risks associated with real-world online purchases, and cite an existing retailer (Amazon.com) and brand (Sony) in our manipulation of familiarity. Therefore, our results could be limited to reactions to specific subjects in relation to specific companies, not retailer familiarity in general. Additional research should explore this possibility and attempt to limit the effect of a specific retailer or brand for explaining feelings of psychological distance in more realistic settings.
This study investigates the role of place in online consumer purchases, as demonstrated through the concept of psychological distance. We reaffirm well-known evidence about the power of relationships in reducing feelings of mistrust and suggest a new avenue for research on retailer-consumer connections through similarity and familiarity. Our results also show that psychological distance is a valuable construct for explaining ratings of retailers' trustworthiness. However, as operationalized, physical location and location congruency do not provide relevant attributes for judgments about retailer trustworthiness. Further research should attempt to validate our findings and explore how they may be applied in online persuasion and advertising efforts.
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About the Authors
Steve Edwards (Ph.D., University of Texas at Austin) is an associate professor at the Temerlin Advertising Institute at Southern Methodist University. His research explores feelings of intrusiveness and reactions of consumers to three-dimensional interactive experiences online. Other research explores product placements, motivations for using the Internet, and advertising in textbooks. He advocates for the profession of advertising and highlights socially responsible advertising on the Web site advirtues.com. Edwards teaches innovative courses on social media marketing, commercialization of virtual space, and interactive advertising. Dr. Edwards's most recent journal articles examine the impact of negative information on the effectiveness of celebrity endorsers in the Journal of Promotion Management; media use patterns in China, Taiwan, and the United States in the Journal of Global Marketing; and product placements in television in the Journal of Advertising. Prior to his work in academia, Edwards was a marketing research analyst at the Press Enterprise newspaper in Southern California. E-mail: steve@smu.edu.
Jin Kyun Lee (Ph.D. Candidate, University of Texas at Austin) is a doctoral student in the advertising department at the University of Texas at Austin. His research interests are cross-border strategic brand alliance, new media, advertising on the Internet, and online consumer psychology and behavior. Previously he worked in Circle of Friends for American Veterans and the Dongbu group brand consulting team, Seoul, Korea. E-mail: leejin5@mail.utexas.edu.
Carrie La Ferle (Ph.D., University of Texas at Austin) is a professor in the Temerlin Advertising Institute at Southern Methodist University. For the past decade, she has taught classes in international advertising and advertising ethics. Her research examines culture in relation to credibility, attitudes toward advertising, ethnic minority media use, language preferences, and diffusion of innovations. Other research interests include product placement and new media channels, as well as assessments of the effects of advertising on society. Dr. La Ferle has authored more than 25 publications in the Journal of Advertising, Journal of Advertising Research, International Journal of Advertising,Journal of Current Issues and Research in Advertising, Journal of Global Marketing, and Journal of Consumer Marketing, among others. Her research has been awarded a variety of grants, and she is listed in several Who's Who publications. She has been a Visiting Fellow at Nanyang Technological Institute in Singapore and received the prestigious university-wide Teacher-Scholar Award while at Michigan State University. Prior to academia, Dr. La Ferle worked in the private sector at a major advertising agency in Toronto, a media buying firm in Los Angeles, and a licensing and merchandising company in Tokyo. E-mail: laferle@smu.edu.
Acknowledgment
The review of this paper was managed by Associate Editor Karen Lancendorfer.
