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Negative online Customer Reviews Do Not Hurt the Strength of Market Leaders

Essay by   •  June 27, 2015  •  Annotated Bibliography  •  2,517 Words (11 Pages)  •  1,153 Views

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Annotated Bibliography

Conceptual Foundations of Marketing

Christina Hayne

Hypothesis 10: Negative online customer reviews do not hurt the strength of market leaders.

Core Article:

Ho-Dac, N., Carson, S.J., & Moore, W. (2013).  The effects of positive and negative online customer reviews:  do brand strength and category maturity matter?  Journal of Marketing, 77, 37-53.

 

Supporting Articles:

Ahluwalia, R., Burnkrant, R., & Unnava, H.R. (2000). Consumer response to negative publicity:  the moderating role of commitment. Journal of Marketing Research, 37, 203-214.

        Because negative information about brands is now widely prevalent, the authors investigated how consumers process negative information about the brands they are committed to. The focus of the article is on “product-related publicity” (pg. 23) and not negative eWOM.  However, an analogy to negative eWOM can easily be made.

        Using Nike and an unknown athletic brand, the authors found that low-commitment consumers exhibited attitude change in response to the negative information, whereas the high-commitment consumers not only resisted the negative information, but also effectively counter-argued the information in many cases.  Commitment to brand clearly emerged as a moderator of negative information effects on attitude change.  The authors’ findings are particularly interesting because they contradict previous research regarding the “negativity effect,” which suggests that people place more weight on negative information than positive information because it is considered more diagnostic.  The findings demonstrate that the negativity effect is not applicable in brand commitment scenarios and that consumers only perceive negative information as more diagnostic when their commitment to the brand is lower.

Ahluwalia, R. (2002).  How prevalent is the negativity effect in consumer environments. Journal of Consumer Research, 29, 270-279.

The negativity effect is a well-accepted assumption in research and appears to be a well-proven phenomenon.  However, Ahluwalia argues that the robustness of the negativity effect in literature is overstated, mostly because prior studies involve unknown targets or brands. Using two experiments, Ahluwalia outlines conditions under which the effect is likely to emerge and those under which it is less likely to occur.  

The research found that brand familiarity is likely to attenuate the negativity effect.  Subjects who were familiar with the brand in the experiment tended to support the positive messages as much as the negative messages.  However, subjects not familiar with the brand generated significantly more support arguments in the negative communication than in the positive communication.  Furthermore, the subjects in the familiar-brand experiment perceived positive information as more diagnostic than those who were unfamiliar.  Interestingly, both groups engaged in relatively similar processing of the negative information and perceived it to be equally diagnostic.  The attenuation of the negativity effect in the familiar brand subjects was driven by the enhanced diagnosticity of positive information in that condition.  The research also found that as the attitude of a brand increases, so does the extent of a processing bias, which will serve to weaken any impact of negative information.  Not only will this lead to an attenuation of the negativity effect, but can also lead to the reversal – a positivity effect.

Arndt, J. (1967).  The role of product-related conversations in the diffusion of a new product.  Journal of Marketing Research, 4, 291-295.

        Arndt performed one of the earliest studies on negative WOM using the diffusion of a new food product.  Exposure to the favorable WOM communications was found to increase the likelihood that the subjects would purchase the new food product.  However, even though the subjects were more eight times more likely to receive positive word of mouth, unfavorable word of mouth was more effective.  The receivers of unfavorable word of mouth were 24 percentage points less likely to buy the new product.  Those receiving favorable WOM were 12 percentage points more likely to buy.  

        Researchers who follow the negativity effect often cite Arndt, however, as it pertains to the hypothesis, Arndt’s research is not applicable.  Arndt’s research did not consider any effect that brand image or brand familiarity might play into the results.  Arndt’s study was focused on a “new food product” not associated with any brand.  As future research demonstrates, brand name is a moderator of the negativity effect.

Bambauer-Sachse, S., & Mangold, S. (2011). Brand equity dilution through negative online word-of-mouth communication. Journal of Retailing and Consumer Services, 18, 38-45.

        Citing prior research that offline communication is more effective than online communication due to its greater accessibility, the authors seek out to examine the effects of negative product reviews on brand equity, hypothesizing that these reviews dilute brand equity.   In their study, subjects were only provided three negative reviews that had been pretested as the “three most negative reviews” (pg. 41).  The results of the study indicated that negative online reviews cause a significant brand equity dilution.  Furthermore, there was a stronger deterioration of brand value perceptions in the case of very familiar brands than in the case of weak brands.

This research appears to contradict most of the other modern research on negative eWOM, however, this research can easily be distinguished.  In constructing their study, the authors rely on the prior work of DeCarlo, Laczniak, Motley, and Ramaswami (see included entry).  The authors use this research to create a “picture-perfect” scenario in which subjects are only exposed to strong, negative reviews and zero positive reviews.  This, however, is not a real-world type of situation.  Most negative reviews are written out of emotion, are poorly written, and consumers are likely to find a mix positive and negative reviews.  In such cases, Laczniak’s study shows that brand image will remain intact. The authors’ research perhaps does hold some merit, but only in the circumstances for which its study provides.  These “picture-perfect” circumstances are not likely to occur outside the lab and therefore, negative eWOM is still unlikely to have any effect on brand equity.

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