When Does Negative Word of Mouth on the Internet Hurt?


Published on

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

When Does Negative Word of Mouth on the Internet Hurt?

  1. 1. BSI When Does Negative Word of Mouth on the Internet Hurt? Marketing 2.0 Conference, Hamburg 2005
  2. 2. BSI Join the conversation MARKETING 2.0 CONFERENCE www.marketing2conference.com
  3. 3. When Does Negative WOM on the Internet Hurt? A Case of Consumer Product Reviews Shahana Sen Fairleigh Dickinson University USA
  4. 4. Online Customer Satisfaction • Online retail sales are up but top online retailers are not performing as well as they might • While financial data is backward looking, customer satisfaction is forward-looking • Drives return visits, future purchases and recommendations ForeSee Results/FGI Research Report (Spring ’05)
  5. 5. Site Experience and Satisfaction • While price is important, online customer satisfaction is the result of a more nuanced experience • Various elements of the “site experience” are the key determinants of satisfaction & loyalty • High satisfaction scores are highly correlated with the likelihood to return, recommend and buy ForeSee Results/FGI Research Report (Spring ’05)
  6. 6. Some Elements of Site Experience
  7. 7. Survey of Leading Causes of Consumer Frustration with US Retailers' Web Sites in Sep ’04 (Source: eMarketer 2005) • 17% of respondents selected Consumer Ratings/Reviews Inadequate or Not provided
  8. 8. • But, online retailers are sometimes reluctant to feature consumer reviews – Only 26% do so (Forrester Research)
  9. 9. Wall Street Journal, Aug 4, 2005 Peter Brig wanted to warn others about the problem he had with the computer storage discs he purchased from Newegg.com. But when he tried to post a product review on Newegg's Web site, the company rejected his submission. Twice. ….. Frustrated, Mr. Brig voiced his dissatisfaction with Newegg's review process on ResellerRatings.com, where customers provide feedback on online retailers. Within days of his posting, a Newegg representative contacted Mr. Brig by telephone, apologized and offered him a full refund for his purchase. While Mr. Brig was glad to receive the refund and continues to shop on Newegg, he says: "I still don't know if I truly trust their review process."
  10. 10. Since, eWOM is from strangers, unlike traditional WOM, do consumers believe and rely on these reviews?
  11. 11. Negativity Effect Are negative product reviews found more credible and more useful than positive reviews?
  12. 12. Consumer Review on Amazon: Computer Manual 8 of 8 people found the following review helpful: Makes a handy doorstop, January 3, 1999 Reviewer: A reader This book came HIGHLY recommended and I have to admit I'm completely disappointed. If I hadn't opened the CD I'd return it. Tries to touch on everything but leaves you with an understanding of nothing. Makes the simplest things very complicated. I bought SAMS Teach Yourself HTML in 24 Hours ($20.00, 450 pages, paperback) prior to this purchase and find myself referencing that book because LeMay either covers the topic in such a Disjointed manner or doesn't cover it at all. Buy a less expensive book. This one just isn't worth it. Was this review helpful to you?
  13. 13. Consumer Review on Amazon: Detective Fiction 1 of 7 people found the following review helpful: Ex-ceptionally boring, December 12, 2001 Reviewer: Diogenes "tlhm" (Park Ridge, NJ United States) - See all my reviewsToo bad. I started reading this book expecting to have the intriguing and intellectual experience of "The Name of the Rose"...and was so terribly disappointed. King is certainly knowledgeable, but that knowledge creates a jumble of a book. One gets the feeling that King would rather try to impress us by the breath of his knowledge, rather than the depth and more so, rather than give us a story that holds our interest. Just sound and fury signifying nothing. His characters are poorly developed stick figures, and by the time I was 3/4 of the way through, I really found I no longer cared about the mystery at the heart of it. How boring was it? I didn't even care enough to read the last pages to find out what all the fuss was about. Was this review helpful to you?
  14. 14. Negativity Effect and Product Type Sen and Lerman, 2005 Observation Study: • Utilitarian products: people rate negative reviews as “useful” more often than “not useful”(61% vs. 39%). • On the contrary, for Hedonic products: negative reviews are rated “useful” less often than “not useful” (28% vs. 72%)
  15. 15. Negativity Effect and Product Type Sen and Lerman, 2005 Lab Experiment: Readers are more likely to trust the motives of negative reviewers in case of utilitarian products, and, positive reviewers in case of hedonic products.
  16. 16. Question Why is there a difference between the usefulness of negative information, based upon product or consumption characteristics?
  17. 17. Hypotheses • Heterogeneity of tastes, and • Motivated reasoning in the case of hedonic products, leads to the absence of negativity effect.
  18. 18. Marketing Take-Away • Readers are likely to discount negative reviews in the case of hedonic products • Web sites typically attract more positive reviews than negative ones • Negative reviews on the Web site give the site an overall credibility