The document discusses how negative word-of-mouth (WOM) online can hurt companies and influence consumers. It notes that while consumers often find negative reviews more credible and useful for utilitarian products, they are less likely to find negative reviews useful for hedonic products due to differences in tastes and motivated reasoning. The key takeaway is that websites should feature some negative consumer reviews to appear credible, but negative reviews may be discounted by consumers for hedonic products.

1. BSI When Does Negative Word of Mouth on the Internet Hurt?
Marketing 2.0 Conference, Hamburg 2005

2. BSI
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3. When Does Negative WOM on the Internet Hurt?
A Case of Consumer Product Reviews
Shahana Sen
Fairleigh Dickinson University
USA

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. 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. Some Elements of Site Experience

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. • But, online retailers are sometimes reluctant
to feature consumer reviews
– Only 26% do so (Forrester Research)

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. Since, eWOM is from strangers, unlike
traditional WOM, do consumers believe and
rely on these reviews?

11. Negativity Effect
Are negative product reviews found more
credible and more useful than positive
reviews?

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. 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. 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. 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. Question
Why is there a difference between the
usefulness of negative information, based upon
product or consumption characteristics?

17. Hypotheses
• Heterogeneity of tastes, and
• Motivated reasoning
in the case of hedonic products, leads to the
absence of negativity effect.

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