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

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Chatterjee, P. (2001). Online reviews: do consumers use them? Advances in Consumer Research, 28.

This research examines the effect of negative reviews on brand evaluation in an online context. Relying on prior research, the authors state that the effects WOM communications occur in the behavior of those who receive it such as their awareness, beliefs attitudes and decisions. Therefore, in determining what the effect of negative reviews might be, research needs to be focused on the inferences consumers draw and their receptivity to the WOM communication.

Chatterjee found that consumers whose decision to patronize a firm is driven by their familiarity were less likely to search for WOM communications. However, even for those consumers that searched for WOM communications on a familiar brand, they are less likely to trust the negative WOM information (as compared to those consumers who are choosing based on price) and their perceived reliability of the retailer remains intact. Chatterjee concludes that consumers who have a positive image on a brand are more likely to attribute the cause of the negative information not to the brand, but to other situational factors. Ultimately, not only did the consumers ignore the negative WOM information, but they also did not change their purchase intention.

DeCarlo, T., Laczniak, R., Motley, C., & Ramaswami, S. (2007). Influence of image and familiarity on consumer response to negative word-of-mouth communication about retail entities. Journal of marketing Theory and Practice, 15(1), 41-51.

Reflecting on issues presented in a prior article by the authors, the research focuses on the impact of brand equity (both image and familiarity) from negative WOM communications. The article sets out the Attribution Theory, which examines how causal explanations are developed for everyday social events and behaviors. In a previous study, the authors determined that typical consumer attribution in response patterns will be altered by the brand name strength. Prior studies by the authors indicate that consumers will attribute the information to the communicator instead and this attribution deflects the negative WOM with no effect on store evaluation. This is especially the case when the negative WOM is ambiguous, defined as low in consensus, low distinctiveness and inconsistent.

The authors find that when store image is positive and store familiarity is higher, receivers of negative WOM tend to attribute the negativity to the communicator and not the store brand. On the other hand, store attributions become higher as consumers have a less positive image and are less aware of the retailer. However, store image plays a more important role than store familiarity. Negative WOM communication has a reduced effect in cases where the store has a positive image, but low familiarity. Market leaders are most likely familiar, but they must also carry a positive image to enjoy the effects of attribution. For example, a store may pursue customers with relatively inexpensive, but low quality, products and services. Although this may assist in keeping costs down, it is inadvisable as it may produce low image and make the store susceptible to negative WOM.

See also Laczniak, R., DeCarlo, T., & Motley, C. (1994). Retail equity perceptions and consumers’ processing of negative word-of-mouth communications. Journal of Marketing Theory and Practice, 4(4), 37-48. Lackzniak, R., DeCarlo, T., Ramaswami, S (2001). Consumers’ responses to negative word-of-mouth communication. Journal of Consumer Psychology, 11(1), 57-73.

East, R., Hammond, K., & Lomax, W. (2008). Measuring the impact of positive and negative word of mouth on brand purchase probability. International Journal of Research in Marketing, 25, 215-224.

The authors present findings on the impact of positive and negative WOM on brand purchase probability, with a focus on familiar brands. In contrast to other research, the authors performed the experiment in a questionnaire format that required subjects to answer multiple questions about personal experiences with WOM. This eliminated the problematic factor that other research incurred: WOM communication in the natural setting is typically communicated with a time lapse before purchase decision, however, in lab settings, the WOM communication has been communicated immediately prior to the “decision.”

Overall, the research indicates that negative WOM is less diagnostic than positive WOM when it is about a familiar brand, disputing the findings of previous research. The authors’ findings demonstrate that when measured by a shift in purchase probability, i.e. a shift from the main brand choice to another, positive WOM is 76% more influential than negative WOM. Most importantly, the experiment revealed that if the WOM is about the receiver’s main brand, it had a positive effect when it is positive and a negative effect when it was negative WOM. Therefore, if a consumer is committed to a brand, but receives negative WOM regarding a brand’s product, the communicator has a difficult, if not impossible, task to dissuade.

Hoeffler, S., & Keller, K. (2003). The marketing advantages of strong brands. Brand Management, 10(6), 421-445.

This article catalogues some of the underlying theoretical mechanisms that have demonstrated the effects of brand strength in advertising. Although there is not a direct focus on WOM communications, the authors do focus on how strong brands come with numerous marketing advantages, which demonstrates that strong brands are less susceptible to the pitfalls of negative eWOM. The authors define “strong brands” as those that are most familiar or defined by outcome measures, such as a market share leader.

Empirical findings from prior research demonstrate that greater brand knowledge can lead to differences in consumer behavior and produce different responses to marketing activities. Consumers will develop a greater number of stronger links for familiar brands and will also avert loss when it comes to strong brands. A strong brand will also create a “halo effect” on consumers. Under a halo effect, a consumer’s positive feelings towards a strong brand will cause a positive bias in the evaluation of the brand and any marketing related to the brand. Thus, even if the communication about the brand is negative, consumers will nonetheless allow their positive bias to overrule and counter that negative communication. Brand strength also has some indirect effects on consumers. In cases of ambiguity, confirmation bias will lead to favorable evaluations of the strong brand. Lastly, consumers use brand names as a signal of the credibility of claims. Because