Friday, October 07, 2005

Why Does Negative WOM on the Internet Hurt? A Case of Consumer Product Reviews

Shahana Sen from Fairleigh Dickinson University is talking about "Why does negative WOM on the internet hurt?: A case of consumer product reviews."

Shahana cites research that shows price is not the key determinant for why people shop online. Instead it's the site experience (which includes whether or not you have register in order to purchase, if it was difficult/easy to compare items, etc.).

Shahana asks: "Since eWOM is from stangers, unlike traditional WOM, do consumers believe and rely on these reviews?" [NOTE: Sometimes WOM can take place between strangers, esp. in point-of-sale situations].

Also, is there a negativity effect? "Are negative product reviews found more credible and more useful than positive reviews?"

For utilitarian products (computer monitors, printers, manuals, PDAs, etc.), people rate negative reviews as more useful more than not useful (61% v. 39%).

For hedonic products (pleasure-providing products: movies, music, etc.), negative reivews are rated useful less often than not useful (28% v. 72%).

She then looked at two different kinds of books -- a computer manual v. a vacation book -- with a controlled experimental design. She found the same results as above.

Readers were more likely to trust the motives of negative reviewers for utilitarian products, but for hedonic prodcuces, readers trusted more positive reviewers.

So, what explains this difference?

Hyptheses: 1) Heterogeneity of tastes (everyone has different tastes for things like movies, restaurants, etc.), and 2) motivated reasoning bias (when looking forward to consuming a hedonic product you are already in an interested state; thus you're pre-disposed towards liking it and thus when you read a negative review you might be more likely to disregard it because you want to support the state that you're already in when seeking the consumption experience).

What's the take-away for marketers?

Websites typically attract more positive than negative reviews. But when you do have negative reviews on your site, don't worry about it, at least for hedonic products. Why? Because readers are likely to discount these negative reviews for hedonic products. Plus, negative reviews on the web site give the site an overall credibility. Of course, you don't want only negative reviews!

Interesting question during Q&A: Are people more likely to seek out reviews for hedonistic v. utilitarian products?

Nice presentation Shahana :-)