Word of mouth and interpersonal communication: A review and directions for future research

For online marketplaces to succeed and prevent a market of lemons, their feedback mechanism (reputation system) must differentiate among sellers and create price premiums for trustworthy sellers as returns to their reputation. However, the literature has solely focused on numerical (positive and negative) feedback ratings, alas ignoring the role of feedback text comments. These text comments are proposed to convey useful reputation information about a seller's prior transactions that cannot be fully captured with crude numerical ratings. Building on the economics and trust literatures, this study examines the rich content of feedback text comments and their role in building a buyer's trust in a seller's benevolence and credibility. In turn, benevolence and credibility are proposed to differentiate among sellers by influencing the price premiums that a seller receives from buyers.

This paper utilizes content analysis to quantify over 10,000 publicly available feedback text comments of 420 sellers in eBay's online auction marketplace, and to match them with primary data from 420 buyers that recently transacted with these 420 sellers. These dyadic data show that evidence of extraordinary past seller behavior contained in the sellers' feedback text comments creates price premiums for reputable sellers by engendering buyer's trust in the sellers' benevolence and credibility (controlling for the impact of numerical ratings). The addition of text comments and benevolence helps explain a greater variance in price premiums (R2 = 50%) compared to the existing literature (R2 = 20%--30%). By showing the economic value of feedback text comments through trust in a seller's benevolence and credibility, this study helps explain the success of online marketplaces that primarily rely on the text comments (versus crude numerical ratings) to differentiate among sellers and prevent a market of lemon sellers. By integrating the economics and trust literatures, the paper has theoretical and practical implications for better understanding the nature and role of feedback mechanisms, trust building, price premiums, and seller differentiation in online marketplaces.

The Nature and Role of Feedback Text Comments in Online Marketplaces: Implications for Trust Building, Price Premiums, and Seller Differentiation

https://isiarticles.com/bundles/Article/pre/pdf/201.pdf

Two hearts in three-quarter time: How to waltz the social media/viral marketing dance

Prior research shows that positive online reviews are less valued than negative reviews. The authors argue that this is due to differences in causal attributions for positive versus negative information such that positive reviews tend to be relatively more attributed to the reviewer (vs. product experience) than negative reviews. The presence of temporal contiguity cues, which indicate that review writing closely follows consumption, reduces the relative extent to which positive reviews are attributed to the reviewer and mitigates the negativity bias. An examination of 65,531 Yelp.com restaurant reviews shows that review value is negatively related to review valence but that this negative relationship is absent for reviews that contain temporal contiguity cues. A series of lab studies replicates these findings and suggests that temporal contiguity cues enhance the value of a positive review and increase the likelihood of choosing a product with a positive review by changing reader beliefs about the cause ...

Temporal Contiguity and Negativity Bias in the Impact of Online Word of Mouth

In "Rumor Psychology: Social and Organizational Approaches", expert rumor researchers Nicholas DiFonzo and Prashant Bordia investigate how rumors start and spread, the accuracy of different types of rumor, and how rumors can be controlled, particularly given their propagation across media outlets and within organizations. Rumors are an enduring feature of our social and organizational landscapes. They attract attention, evoke emotion, incite involvement, affect attitudes and actions - and they are ubiquitous. Rumor transmission is motivated by three broad psychological motivations - fact-finding, relationship-enhancement, and self-enhancement - all of which help individuals and groups make sense in the face of uncertainty. Rumor is closely entwined with a host of social and organizational phenomena, including social cognition, attitude formation and maintenance, prejudice and stereotyping, group dynamics, interpersonal and intergroup relations, social influence, and organizational trust and communication. Organizational rumors, in contrast with natural disaster rumors, tend to be highly accurate, with accuracy being affected by cognitive, motivational, situational, group, and network factors. DiFonzo and Bordia describe how managers can most effectively manage and refute rumors and infer that employee trust in management inhibits rumor activity.

Rumor Psychology: Social and Organizational Approaches

Consumer Responses to Rumors: Good News, Bad News

Prior research has suggested that the brand consumers believe is the market leader or market pioneer can earn positive feedback for these achievements. The key question is how do consumers form these beliefs? This research examines the sources of information and cognitive processes that consumers utilise when determining which brand in a particular product category is a pioneer or market leader. These processes of source identification - including memory trace, schematic inferencing, direct-cue retrieval, and guessing-- are applied in this brand characteristic context, and measured in terms of their relative frequency of occurrence, degree of confidence from each process, and accuracy of each process. Consumers may feel varying degrees of confidence in the different types of inferential processes, and these different processes may actually result in varying degrees of accuracy. Results show that consumers typically evoke "schematic inference" as a rationale for their identification of a given brand as having a category characteristic. Those who use memory trace, however, are particularly confident that they have identified the true category characteristic, but are particularly inaccurate in such identification for the pioneer brand. These findings are discussed in the broader context of source inferential processes and their importance to marketing strategy.

How do consumers know which brand is the market leader or market pioneer? Consumers' inferential processes, confidence and accuracy

Does a brand benefit from being perceived as market leader or market pioneer? What happens when a brand is misperceived as market leader or market pioneer? This research presents an empirical design that tests if consumer awareness of market leadership and market pioneership has an impact on brand evaluation and preference. The research also introduces the concept of consumer misperception of which brand was market leader or market pioneer. The potential difficulties of using perceptions of real brands in research are addressed through a within-brand comparison approach. Through a survey approach using a household research panel, the manuscript examines the prevalence of such misperception, and the degree to which brand evaluation, attitude, and purchase intention are impacted by the correct perception or misperception that the brand is a market leader or pioneer. Survey results generally show a significant enhancement in brand evaluation for those brands perceived as leaders or pioneers relative to followers. Perceived market leadership is associated with more favourable evaluation relative to perceived pioneership. Brands misperceived as the market leader or pioneer brand accrue all of the benefits of brands correctly perceived as market leader and pioneer brands. Managerial implications of these findings are discussed in terms of the significance of market leadership and market pioneership as positioning bases, and in what situations are they most useful. These characteristics, market leadership and market pioneership, are linked to the literature on market share effects and customer-based brand equity

Lars Perner

Papers

Consumer Responses to Rumors: Good News, Bad News

How do consumers know which brand is the market leader or market pioneer? Consumers' inferential processes, confidence and accuracy

Consumers' perception and misperception of market leadership and market pioneership