Making Sense of IWOM: How IWOM is generated and disseminated

Contents Overview 3 Do consumers proactively generate and 5 disseminate IWOM? Why do consumers generate and disseminate 10 IWOM? How to segment the consumers who actively 12 generate and disseminate IWOM? About IWOM White Paper 17 About CIC 18 2 © 2009 CIC

Overview For the past 5 years, CIC has been studying Chinese consumers through systematic observation and analysis of social internet platforms such as blogs, BBS and social networks. CIC uses a unique methodology that combines quantitative and qualitative approaches, including online ethnography, as well as cutting edge text mining technology. Through systematic observation and analysis of online platforms, their users and other essential elements, we have come to understand consumers’ online behavior and culture. In Topic1 of CIC’s “Making Sense of IWOM” white paper series, we discussed “the role of internet word of mouth (IWOM) in purchase decisions” and found that consumers pay attention to and search IWOM to reduce purchasing risk. Furthermore, IWOM has the ability to change consumers’ attitude towards brands. IWOM is playing an increasingly important role in the consumer purchase decision-making process especially when it comes to brand awareness, purchase decision and post-purchase behavior. In addition to searching for and paying attention to IWOM, will consumers then take initiative to generate and disseminate IWOM? What motivates consumers to generate and disseminate IWOM? How do we segment the consumers that are actively expressing and disseminating IWOM? These are the subjects we will dissect in Topic 2: “How IWOM is generated and disseminated” . We found that consumers in online communities not only passively listen to and receive messages, but also proactively post and disseminate comments about brands and products. This behavioral pattern builds the process of IWOM circulation and user interaction. According to our research findings, 54.1% of BBS and blog users will initiate conversations or post comments related to brands and products. In terms of gender, females are more active in brand related online discussions. Regarding age, over half of the respondents between the ages of 18 to 24, 25 to 30 and 31 to 35 proactively post their comments about brands and products online. These age groups are more active in expressing their opinions or advice towards brands and products than other age groups. Through further study on the BBS/blog users who post brand/product related comments, we identified key situations that drive consumers to post and share comments. We found that 32.4% of respondents’ comments were “triggered by others’ comments” which means they express opinions in response to others’ comments about brands or products. This not only shows the wide reach and circulation of IWOM, but emphasizes the strong influence of IWOM and the interaction between community users. Meanwhile, respondents mentioned they will generate comments about product user experience, especially after overly positive or negative experiences. When it comes to age, respondents between the ages of 15 and 24 tend to express fine product experiences and they are prone to be affected by others’ comments and join the discussion, while respondents between 25 and 35 are more likely to post comments about extremely positive or negative product experience. Respondents over the age of 35 care more about expression itself. They tend to express comments more freely and independently whatever the product experience and are less influenced by others’ comments. 3 © 2009 CIC

Overview As these are naturally occurring consumer comments, in general IWOM authentically reflects the consumers’ impression of brands and products directly or indirectly. According to our research findings, 70% of respondents indicated that almost all the messages they posted are from real personal experience. In addition to sharing personal experiences, consumers will also disseminate credible comments in online communities about brands and products they have not tried yet, which also promotes the dissemination of IWOM. The 3 most important motivations for consumers to generate and disseminate IWOM are interpersonal communication, self expression and experience sharing. In terms of gender, females focus on interpersonal communication and experience sharing; while males focus on self expression. In terms of age, young consumers between 18 and 24 show a stronger motivation to express themselves online across all categories of motivation. This group of consumers is the key group for brands to understand and form long-lasting relationships with for the future. Additionally, BBS serves as an organized gathering platform of information and topics. BBS users are motivated to generate posts to help others or seek solutions to problems; while blog users are motivated by self expression. Blog users pay more attention to express personal opinions and share individual experiences. Active users are more motivated to participate in conversations and are enthusiastic about expressing their preferences and passions for brands and communicating with friends about shared interests. They are the key group to target to generate and disseminate IWOM. To gain better insight into the characteristics and culture of online community users, we segmented the active users into disseminators and opinion leaders and conducted further research on these specific groups. Disseminators’ motivation for expressing opinions actively can be summarized into five categories: meet more friends and communicate with them online; share knowledge and experience; defend the truth of brands or products; help their growth in the online community; help their work. As for opinion leaders, they are core members of the online community who have authority and influence over other users. They are segmented into 4 categories: professional writer, experienced writer, normal writer and work related writer. This report is a general analysis of the online community and its members. The real online community is more complicated and diverse; however, this analysis should provide a useful framework for marketers and market researchers to better understand the online environment and its users. With the innovation and development of the internet, online community members are also evolving and growing. Therefore, brands need to participate in the online community to understand consumers’ insights and communicate with them on an equal level. Accordingly, we will discuss how brands can participate in online communities in topic 3 of CIC’s “Making Sense of IWOM” white paper series. 4 © 2009 CIC

Do consumers proactively generate and disseminate IWOM? We mentioned in Topic 1 that Chinese consumers are forming a habit of searching IWOM before purchasing. Will consumers only search and listen to IWOM or will they also actively express or disseminate comments related to brands or products in the online community? Based on our previous IWOM research experience, we found that although every online community member has the ability to express, disseminate and receive information, each netizens has a different level of passion for and role in generating and disseminating IWOM. Therefore, we have segmented the online community users into different categories according to their level of involvement. General participants Less active members in the online community. They often view others’ posts and opinions while rarely create content to express their own comparatively. Active users The active online community members who often express opinions online. They can be further segmented into the following 2 categories:  Disseminators: The active users who express their own opinions and comments via posting or disseminating messages, articles etc.  Opinion leaders: They are core members in online community who are prestigious and powerful participants with most activities and posts. The BBS/Blog general participants and active users (including disseminators and opinion leaders) are defined by a set of criteria. The indicators for segmenting community users includes the number of posts they created per month, status and level in the community, the proportion of original post and copy paste post as well as their online movement in the community recently etc. 5 © 2009 CIC

Do consumers proactively generate and disseminate IWOM? Figure 1 Whether consumers proactively comment on brands/products By researching 640 BBS users and bloggers, we found the following points: • 54.1% of respondents generate comments online related to brands/products. • Female (59.5%) behave more actively than male (49.6%). • Regarding age, over half of the respondents between the ages of 18 to 24, 25 to 30 and 31 to 35 proactively post their comments about brands and products online. These age groups are more active in expressing their opinions or advice towards brands and products than other age groups. Data source: CIC, 640 BBS/Blog users 6 © 2009 CIC

Do consumers proactively generate and disseminate IWOM? We conducted further analysis of 346 respondents who express opinions on brands/products online • The findings show that there were 4 types of situations in which these users express comments. 32.4% of respondents’ comments are “triggered by others’ comments”, 28% “comment after an extremely positive product experience”, 20.2% are “willing to comment whatever they experienced” and 19.4% “comment when the experience is terrible.” • Regarding gender, females prefer to express their negative experiences, while males are more frequently express their opinions in the following three situations. • When it comes to age, young respondents between the ages of 15 and 24 tend to express fine product experiences, They are prone to be affected by others comments and join the discussion. while respondents between 25 and 35 are more likely to post comments about extremely positive or negative product experience. Respondents over the age of 35 care more about expression itself. They tend to express comments more freely and independently whatever the product experience is and are less influenced by others’ comments. Figure 2 Situations that motivate consumer comments about brands/products I Data source: CIC, 346 BBS/Blog users that post comments on brands/products online 7 © 2009 CIC

Do consumers proactively generate and disseminate IWOM? We also found that consumers’ post behavior is influenced greatly by different online community platforms and their level of activity online. • Blog users prefer to initiate their own posts to share their experiences or opinions while BBS users’ comments are more driven by others’ comments. • Additionally, the behavior of active users drastically differs from general participants. Active users will take initiative to start conversations to express their opinions while general participants more often reply to others’ comments. With the development of the internet, more consumers are not merely searching for IWOM about brands or products, but are also sharing their product and brand experiences. In addition, they are actively disseminating IWOM throughout the online community, promoting the circulation of information and interaction between consumers online. Figure 3 Situations that motivate consumer comments about brands/products II Data source: CIC, 346 BBS/Blog users that post comments on brands/products online 8 © 2009 CIC

Do consumers proactively generate and disseminate IWOM? We have analyzed the different situations that drive consumers to express comments. But are those online comments all from their personal experiences? Will they only comment on products and brands from their own personal experience? Almost 70% of the 346 BBS/blog users who post brand/product comments stated that all or at least most of the IWOM messages about brands and products were from their real experience, while only 3.8% of respondents engaging in conversation have no product experience. Therefore, generally speaking, IWOM reflects the consumers’ authentic impression of brands. However, what about the active users that comment but have little or no experience with brands? Actually, based on the qualitative interviews we found that some consumers will act as online information disseminators and will spread credible posts by others. In some cases they will just copy and paste the original post into multiple forums and at other times they will add their own opinions even though they have no direct experience with the product or brand. This behavior helps promote the dissemination of IWOM across communities. Respondents mentioned that this habit of disseminating information happens for the following reasons: First, other users’ comments accurately represent their own opinions; Second, they would like to share and help other users because they found the post interesting or useful; and finally, some of them want to acquire more friends by interacting and communicating with other users. Of course, we cannot exclude the possibility of the small group of seeders. Figure 4 Whether online comments are based on real experience Data source: CIC, 346 BBS/Blog users that post comments on brands/products online 9 © 2009 CIC

Why do consumers generate and disseminate IWOM? Throughout our research, We found many consumers expressed opinions, as well as participated in discussion and disseminate posts actively in online communities. What are the motivations behind this? Based on our research, we summarized the following 8 types of motivations for generating and disseminating IWOM: interpersonal communication, self expression, experience sharing, community status, helping others, upholding justice, work *Note: related and seeking help*. Interpersonal communication: Communicating with friends In terms of gender, males were more motivated by self expression and senior members in online and are more active than females in generating IWOM to improve communities in real life and their work. Females are more motivated by interpersonal online. communication and experience sharing. They also show more Self expression: Expressing passion in defending the reputation of their favorite brands or opinions, experiences and disclose some bad products. In terms of age, the respondents feelings. between18 and 24 showed stronger motivation in most aspects Experience sharing: Sharing over other age groups. These young consumers have strong online personal product personalities and are full of energy. They are a key target group for experiences, usage brand to understand and cultivate relationships with in the future. experiences and learned lessons. Figure 5 Motivation behind consumer participation in Community status: online communities I Maintaining prestige and popularity in an online community. Helping others: Replying to others’ questions, transferring useful and insightful posts for other users’ reference . Upholding justice: Exposing seeded or fake messages, defending good brands/products or disclosing bad ones to urge them to improve products or services. Work related: Further discussing and communicating with clients, strengthening relationships with current customers and seek potential business cooperation to improve work. Seeking help: Asking for Data source: CIC, 346 BBS/Blog users that post comments on others’ advice, seek for brands/products online solution when having difficulty. 10 © 2009 CIC

Why do consumers generate and disseminate IWOM? The motivations behind consumer participation in online communities also differ across various platforms. Users in BBS are more frequently motivated by the desire to help others, to uphold justice or to ask for help. Consumer posting behavior in BBS is mainly driven by the following: posting replies to help others; researching IWOM before purchasing; looking for solutions post-purchase; defending good brands/products or disclosing bad ones . Compared with BBS, blogs is a better platform for self expression. Consumers are more motivated to publish blog articles on brands or products for the following reasons: to record personal life experiences; to express opinions and preferences including his/her passion towards different brands and product experience. These findings also coincide with our findings for BBS and blog in our “Internet is THE Community- Topic 1: The Chinese IWOM Landscape” released in 2008 which stated: “BBS is the platform that aggregates information and topics and helps users find friends with shared interests to communicate with, while most blogs are diaries or very personal expressions .“ For user segmentation, active BBS and blog users are motivated by all of the aspects mentioned above. This is further explained in Topic 1 of “Making Sense of IWOM” where we found that: ”compared with general participants who pay attention to IWOM to reduce purchasing risk, active users prefer to find friends with shared interests to communicate their preferences. In other words, they pay attention to IWOM even with no clear purchasing intention. They are willing to express their passion and preferences towards brands and share with friends with same interests” Figure 6 Motivation behind consumer participation in online communities II Data source: CIC, 346 BBS/Blog users that post comments on brands/products online 11 © 2009 CIC

How to segment the consumers who actively generate and disseminate IWOM? We mentioned in the previous section that active users and general participants had different motivations for generating and disseminating IWOM in online communities. During the research interviews, we also found that the active BBS and blog users were willing to spend time and energy in online communities, express and disseminate various information and personal opinions. In the following section we will try to describe these active users’ vibrant online life and personality characteristics. As mentioned in the summary, we segmented active users into disseminators and opinion leaders according to their different level of involvement in generating and disseminating IWOM. Disseminator actively express themselves and share personal opinions on the internet. They are willing to disseminate information and feelings both related and unrelated to products and brands. The factors that motivate them to devote their time and energy to participating in online communities generally include the following: Communicating with friends To communicate with friends with shared interests in real life and online community. Disseminators emphasize "people" and interaction in online community. Blogs function as a private platform which is more convenient for communication with intimate friends. BBS is an open platform for chatting with friends and others about common topics. These users engage in many online and offline events with their online friends shortening the relationship distance from both a mental and physical perspective . Example: Made friends in online communities first, and then bought a car: " I joined this QQ Car club and made a lot of friends, I discovered the QQ car suits me, so I bought it. " Posted messages is a good way to interact with friends: “After you participate in a BBS for a while, you will naturally develop close friends. Replying to a post is a kind of way to communicate with them.“ Actively participated in off-line activities: “I always take part in all the activities held by the Car club and which usually involve traveling. Someone also shared a good recommendation for a cheap gas station." 12 © 2009 CIC

How to segment the consumers who actively generate and disseminate IWOM? Sharing knowledge and experience They have rich knowledge and experience and are willing to share this information with online friends to help others. They value "content sharing" in online community and are willing to share their experiences regarding brands and products. They enjoy knowing that their information, answers and solutions are helping other users. Example: Getting a lot of fun out of content sharing: “I enjoy the process of sharing and I also benefit from it. In many cases I go from knowing nothing to knowing something and in turn am able to teach others.” “After buying Excelle , I posted many pictures of it on BBS ." Defending the truth They hope online user comments are based on real experiences with products or brands. If they see some brands or products are slandered, they will definitely defend the truth by expressing their personal experiences. They also will expose seeding posts using evidence if they come across a post where a brand or product is overly praised. They will defend brands or products they think are attacked unfairly and will criticize brands that they believe are bad or harmful. Example: Hope each product and brand is treated equally: “It is unfair to some brands when people just echo other’s complaints without having their own views. I wrote a review of a headphone which was attacked by others on BBS.” Obtain happiness from revealing the seeders: "It is fun to disclose the seeders in the community." 13 © 2009 CIC

How to segment the consumers who actively generate and disseminate IWOM? Growing in online community They want to do something meaningful because the online community has become a part of their life. At the beginning they just lurk, then they will become more active and post a few useful articles to enrich the online community. As their experiences online develop further, their activity level and comments quality upgrade, and their influence within communities becomes stronger. Example: If you stay in a community for a long time, you will start to present your own ideas: "You have to reply to something, since just lurking or spamming is not good. Once you realize it is meaningless, you will start to share something useful. Therefore, you should start a conversation and share your feelings with others.” Helping them with their work To strengthen their relationships with current customers and seek potential business opportunities and cooperation. They update their blogs or start new conversations in order to enhance the communication with clients or sell products. Example: In-depth communication with customers: “Sometimes I will invite some of my customers to visit my blog and if I find some good articles, I will put them on my blog. Blogs are a good platform for communication.” Post or update blogs to sell products part-time: “I also write articles about badminton, and sometimes organize badminton competitions. My blog is a good channel to find and invite others.” 14 © 2009 CIC

How to segment the consumers who actively generate and disseminate IWOM? Opinion leaders are the most active and influential groups in online communities. They show unique power in their respective skilled area. We conducted in-depth interviews with BBS/Blog opinion leaders to explore the IWOM behavior of this demographic. Through research, we found that different opinion leaders vary in terms of motivation, experience and professional level. Based on this, we segmented them into 4 categories as below: These contributors are passionate about particular products or brands. Most of their articles are written in a professional manner and are based on real experience. They keep their platforms and profiles well maintained and are creative with them. “At the beginning, I set up my blog to tell people that Lining is a really good domestic brand. I did this to both support the domestic brand and also to increase the popularity of my blog. I update my blog every day and also visit BBS frequently, so I have a deep understanding of these two platforms." These contributors are experts of their favorite brands and product categories. Their articles are mainly from their own experiences and personal perspectives . They enjoy the fun and creativity of expressing themselves online. “I pay more attention to notebook computers, because I often change my notebook, and frequently help my friends to choose an appropriate notebook computer. I am honest and I tell them the advantages and disadvantages of the products. ” They are not professional or particularly experienced in online community. However, they are willing to share their thoughts about the product experiences and other information. They care about their status in the community and other users’ feedback. “Every weekend, my mailbox is filled with flyers and advertisements. I share any useful information that I come across with others in BBS.” “Within BBS, I am able to make friends with many mothers. Although we have never met in person, we still could make a phone when I got problems." Their articles are in-depth and systematic and cover a wide range of topics. Most topics are deliberately chose and are not based on experience. They upload blog posts and BBS conversations regularly to make their platforms attractive to other users. They consider BBS or blog as their main or part-time career. “I am always online except meal time. I search for information and write articles in the morning ,communicate with friends and have a rest in the afternoon.” 15 © 2009 CIC

How to segment the consumers who actively generate and disseminate IWOM? Our analysis provides an overview of the online community and its user groups. The real online community is more sophisticated and dynamic and the role of a netizen is diverse and changeable rather than stable and fixed. One user may be an opinion leader or disseminator in one area, and a general participant in another. Also, one user may be an opinion leader in one community while is disseminator or general participant in another. Moreover, with the innovation and development of the internet, online communities are always evolving and netizens are consistently growing and changing within the online community. The “general participant” today may grow to be the “disseminator” or even the “opinion leader” in the future. Therefore, brands should not simply listen to the IWOM, understand the group’s characteristics and culture, but more importantly, brands need to participate and become involved in the online community to benefit from consumers’ insight and communicate with them on an equal level. Furthermore, in Topic 3 “how brands can participate in online communities” ,we will elaborate on ways brands can motivate and trigger netizen’s passion and creativity to bring more value to the brand as well as online community via meaningful interaction. 16 © 2009 CIC

About IWOM White Paper About CIC IWOM White Paper In the past five years, CIC led by our Intelligence Center has continued to share our latest research and findings about IWOM in China with industry clients and friends. Based on our insights and experiences from working in the Chinese IWOM research industry for almost 5 years, our CIC IWOM Whitepapers also incorporate thinking from areas such as marketing communications, IT, sociology and statistics. In publishing these whitepapers we aim to create a resource which monitors and catalogues the developments in the IWOM industry and in doing so helps to move the whole industry forward as a result. From last year’s IWOM Whitepaper series titled the “Internet is the Community” to this year’s series titled “Making Sense of IWOM,” we have shown how powerful the Internet and IWOM is in reshaping the relationships between brands and consumers and that consumer comments have now become the key factor in influencing purchase decisions. For more information about the Chinese Internet and the rapid development of IWOM in China please visit iwommaster.com or our blog seeisee.com, or to see all our previous whitepapers please visit our slideshare site. About “Making Sense of IWOM” White Paper series This research, conducted by CIC, is the first of its kind in China and is based on comprehensive qualitative and quantitative offline research in Beijing, Shanghai, Guangzhou and Chengdu, whose survey results include feedback from 640 BBS/blog users, 8 focus groups discussion and 32 in-depth interviews with efluencers. CIC will leverage these results and combined with its unique and leading perspectives on Chinese IWOM development, to create a total of 3 in-depth installments including “the Role of IWOM in Purchase Decisions”, "How IWOM is generated and disseminated" and "How brands can participate in online communities." 17 © 2009 CIC

About CIC CIC is the thought leader in Internet Word of Mouth (IWOM) with over 4 years experience in China working with cutting edge clients across multiple industries on a retainer basis. With a proven approach and case studies, CIC is the first and best option in China to help clients make sense of the buzz. CIC coined the term IWOM and has pioneered the concept of IWOM, redefining the relationship between brands and consumers. CIC is committed to both providing objective third party strategic advice to clients and promoting the healthy development of the Internet Community in China. CIC's research and discussion of IWOM's impact and best practices can be found on its company blogs, in its IWOM white papers and IWOM watch reports and through its IWOM roundtable events such as IWOM summit and IWOM classroom. CIC offers customized and syndicated reports as well as an industry leading IWOM analytics dashboard which is supported by proprietary Chinese language based text mining technology (patent pending), data processing technology and data visualization technology. CIC's retainer relationships stretch over multiple years with multinational clients from Fortune 500 companies. CIC's continual development and evolution is driven by an unique, powerful and open mindset and learning culture which at its foundation continually seeks to understand how the Internet, and IWOM, is redefining the relationships between brands and consumers. For more information, please visit • www.iwommaster.com (CIC IWOM master intelligence service platform) • www.ciccorporate.com (CIC website), • www.seeisee.com (CIC Company blog in Chinese) • www.seeisee.com/sam (Founder's company blog in English). 18

Address: Room 108, Building A, UDC Innovative Plaza No.125, North Jiangsu Road Shanghai, 200042, China Phone: 021-52373860 / 61 / 62 / 63 Fax: 021-52373632 Email: info@cicdata.com This report is copyrighted material owned by CIC. Any improper use of this document or its content will be considered a violation of CIC IP copyright and CIC has the right to take legal action. © 2009 CIC

Making Sense of IWOM: How IWOM is generated and disseminated

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Making Sense of IWOM: How IWOM is generated and disseminated — Document Transcript

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